Alphabet plans to borrow another $20-25 Billion, on top of the $50 billion in bonds and $85 billion in equity it sold earlier in 2026.

By Wolf Richter for WOLF STREET.

Alphabet, one of the biggest hyperscalers building out the AI infrastructure, wants to borrow more money, again, this time between $20 billion and $25 billion in a bond offering of up to 10 parts, with maturities ranging from 2 years to 40 years, according to Bloomberg, citing sources.

But if the yield is high enough, investors will come. Alphabet has received $115 billion of orders for this offering. The managers of the bond sale are Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo.

Alphabet’s shares dropped 1.0% on the news. And these bonds compete with Treasury securities for investor attention. To take on the additional risk, investors in these Alphabet bonds get a higher yield than on Treasuries, and it draws demand from Treasuries. And so when this news emerged, the 10-year Treasury yield rose by about 6 basis points to 4.68%.

Earlier this year, Alphabet had already sold about $50 billion in bonds, including 100-year bonds, in various currencies. Plus in June, it raised $85 billion by selling stock and mandatory convertible preferred. Share buybacks were scaled back last year and went to zero this year.

Alphabet spent $45 billion in Q2 on capital expenditures, mostly for AI infrastructure such as data centers, doubling from a year ago, thereby creating negative cashflow of $6 billion in the quarter.

And there is much more cash-burn to come: During its Q2 quarterly earnings call, Alphabet raised its full-year 2026 capital expenditure guidance to a range of $195 billion to $205 billion (from the $180 billion to $190 billion guidance in the prior earnings call). And it said that capital spending in 2027 would increase significantly from those levels.

So far this year, and not including this newest bond offering, just four companies – Alphabet, Amazon, Meta, and Oracle – sold $194 billion of bonds to fund the AI cash-burn. Alphabet’s deal would push the year-to-date total up to $219 billion. This does not include the funds raised via equity sales.

The AI infrastructure giants – Alphabet, Amazon, Microsoft, Meta, Oracle, and SpaceX combined – are expected to plow between $800 billion and $900 billion in cash into capital expenditures in 2026, primarily on AI infrastructure, and that amount keeps getting ratcheted higher, and we’re seeing some of it in the exponential surge of construction spending on data centers.

These companies used to be asset-light and used to produce huge amounts of cash flow from their endlessly scalable services offerings, that allowed them to engage in large-scale share buybacks, which was so appealing to Big Tech investors.

But now they’re turning into asset-heavy companies, similar to manufacturers, with massive amounts of money tied up in huge facilities that they funded in part by loading up on long-term debt. Their income will be hobbled by large amounts of expenses from interest, depreciation, and operating costs, while share buybacks – except for Microsoft – have vanished or have flipped to the opposite: share issuance. And that’s a complete change in business model.

In terms of the US economy, this investment boom and cash burn — Corporate America plowing many hundreds of billions of dollars of their cash and investors’ cash quarter-after-quarter into the economy, instead of into share buybacks — is hugely stimulating across many sectors, and is becoming one of the drivers of inflation.

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