Alphabet Century Bond Draws Questions

This article first appeared on GuruFocus.

Alphabet (GOOGL, Financials) is under fire for issuing a 100 year bond to fund AI capital expenditures. Fundstrat economic strategist Hardika Singh called the offering a long-term investment on a new technology. She highlighted that century bonds are usually issued by older institutions, raising doubts about whether a digital business can survive disruption over time.Ten times oversubscribed, the bond showed high demand from institutional investors seeking long term assets. Singh cited JCPenney and General Motors’ century bonds, which experienced financial trouble. She added Alphabet’s ability to renew itself over the next century is essential.Major IT companies are investing more in AI infrastructure. Alphabet predicted increased data center and computer investment.Strong investor demand implies sustained trust in highly rated issuers notwithstanding long-term disruption risk and market concentration in major technology firms.Investors will examine if big AI investment boosts profitability and whether credit markets accept long-term corporate debt.