Alphabet’s Century Bond And Wiz Deal Redefine Long Term AI Bet

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• Alphabet issued a 100 year bond as part of a record $20b multi currency debt sale to fund AI and cloud infrastructure spending planned for 2026.

• The company shifted from relying mainly on internal cash generation to raising large scale long term debt to support data center and AI chip investments.

• The EU granted unconditional approval for Alphabet’s $32b acquisition of cloud security company Wiz, its largest acquisition to date.

Alphabet, NasdaqGS:GOOGL, is stepping up capital investment at a time when its share price sits at $310.96 and its 1 year return stands at 70.0%. Over 3 years the stock has returned 223.2%, and over 5 years 195.8%, placing it among the stronger long term performers in large cap tech. These new funding and acquisition moves come on top of that track record and represent a new phase in how the balance sheet is being used.

For investors, the century bond and Wiz deal highlight how management is leaning into AI and cloud as long term pillars of the business rather than treating them as shorter term experiments. From here, the key questions will center on execution, how efficiently this new capital is deployed, and how well Wiz is integrated into Google Cloud’s security stack over time.

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Alphabet’s latest bond sale shifts part of its AI infrastructure bill from equity holders to long term creditors. The company has spread the US$20b raise across multiple fixed rate senior unsecured tranches in US dollars, pounds and Swiss francs, with maturities spanning from 2026 out to a 100 year “century bond.” Coupons such as 4.80% on notes due 2026, 3.70% on notes due 2029, 4.10% due 2031 and up to 5.75% on notes due 2066 lock in funding costs for a long time, while keeping all of the instruments senior and unsecured. For shareholders, that means Alphabet is layering predictable interest expense on top of an already cash generative profile to support a planned US$175b to US$185b capex program for 2026. The decision to use debt rather than rely solely on internal cash or more equity reduces near term dilution but lifts gross debt and long term obligations. The EU’s green light for the US$32b Wiz acquisition at the same time underlines how this balance sheet capacity is being pulled into Google Cloud, particularly security, as management leans into hyperscale AI data centers and enterprise contracts.

• The century bond and wider multi currency offering line up with the narrative of heavy AI focused infrastructure spending and growing Google Cloud demand, giving Alphabet long dated funding to support those catalysts.

• The sharp step up in capex and use of sizeable fixed income offerings could pressure margins and free cash flow, which may challenge the assumption that earnings growth keeps pace with spending if monetisation from AI products or Google Cloud slows.

• The narrative highlights AI, cloud and subscriptions but does not fully factor in the scale and tenor of 40 to 100 year debt, or the integration risks and capital needs attached to Alphabet’s largest ever acquisition in Wiz.

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• ⚠️ Alphabet’s plan to spend up to US$185b on capex for 2026, funded in part by a larger debt stack, could squeeze returns if AI and cloud revenues slow or pricing comes under pressure from Microsoft Azure and Amazon Web Services.

• ⚠️ Long duration fixed coupons on senior unsecured notes, including 40 year and 100 year paper, increase interest rate and refinancing risk if business conditions, regulation or competition materially worsen over time.

• 🎁 Locking in multi decade funding at known rates gives Alphabet financial flexibility to pursue large data center and chip projects without recurring equity issuance, while it still holds a substantial net cash position according to recent commentary.

• 🎁 EU approval of the US$32b Wiz deal supports Google Cloud’s security offering, potentially strengthening Alphabet’s position with enterprises that are already investing in AI powered workloads across multiple cloud providers.

From here, it is worth tracking how Alphabet’s interest expense trends relative to operating income and free cash flow as the new bonds season, and whether leverage metrics remain conservative while capex runs at US$175b to US$185b. Investors can also watch for updates on Wiz’s integration into Google Cloud, such as customer wins, product launches and any disclosure on deal related amortisation or restructuring costs. Competitive responses from Microsoft and Amazon in both cloud security and AI infrastructure will help show whether Alphabet’s debt funded push is keeping pace with peers or starting to weigh on profitability. Finally, any changes to the company’s capital return plans, including buybacks and dividends, will signal how management balances debt service, growth spending and cash returns over the next few years.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include GOOGL.

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