Alphabet completed its largest-ever dollar bond issuance on Monday, successfully raising $20 billion to fund its massive artificial intelligence (AI) development plans. Despite market concerns about the tech giant's surging capital expenditures, investors responded enthusiastically to the bond issuance, with orders exceeding $100 billion, demonstrating high market confidence in its creditworthiness. Analysts predict this AI-driven funding wave will push investment-grade bond issuance to a record high this year and could reshape the risk and return structure of the corporate bond market. However, some hold a pessimistic view. Michael Burry, the real-life inspiration for the film "The Big Short," remained bearish, pointing out that Motorola, which last issued a century-old bond, is now far less powerful than before.
The market demonstrates high confidence in the creditworthiness of tech giants.
Despite Alphabet's projected record-high capital expenditures this year, investor demand for its bonds remains strong. According to Bloomberg , the $20 billion offering exceeded the initial expectation of $15 billion and attracted over $100 billion in subscription orders, reflecting a positive market sentiment regarding the tech giant's long-term solvency. Notably, Alphabet is planning an extremely rare "century bond" issuance in the UK, marking the first time a tech company has attempted such ultra-long-term financing since the dot-com bubble of the late 1990s. As for its dollar bonds, the 40-year bond maturing in 2066 yields only 0.95% higher than US Treasury bonds, lower than the previously discussed 1.2%, indicating a tightening credit spread and investors' willingness to accept a lower risk premium for the company's debt.
AI arms race drives historic capital expenditures
The core driver of this bond issuance stems from the fierce AI arms race among tech giants. Alphabet estimates its capital expenditures this year will reach $185 billion, exceeding its total expenditures over the past three years, with the majority of funds flowing into data center and cloud infrastructure development. It is projected that the combined capital expenditures of the four largest U.S. tech companies will reach approximately $650 billion by 2026. This atypical capital expenditure cycle demonstrates that these companies are actively utilizing debt financing to secure computing resources in order to dominate the future AI economy. While the massive expenditures have raised concerns about financial burdens, Alphabet emphasizes that AI technology has begun to drive revenue growth in its search business, attempting to demonstrate the substantial return potential of these upfront investments.
The potential impact of the massive bond issuance wave on the credit market
Wall Street is facing a massive surge in bond supply as companies like Oracle, Amazon, and Meta expand their spending. Morgan Stanley forecasts that mega-corporations will borrow a staggering $400 billion this year, up from $165 billion in 2025, potentially pushing overall investment-grade bond issuance to a record $2.25 trillion. Some credit strategists believe this massive supply could lead to widening credit spreads on corporate bonds, meaning higher financing costs for businesses. Strategists liken the current situation to the market cycles of 1997 or 2005, when credit performance lagged behind but had not yet reached the end of the economic cycle. This suggests that while the bond oversupply may create short-term pressure, the overall credit market structure has not yet presented a systemic risk.
The historical lessons of shorting Michael Burry
In response to market optimism, Michael Burry, the real-life inspiration for the film *The Short Sellers*, offered a thought-provoking historical comparison. He pointed out that the last time a tech giant issued a 100-year bond was in 1997, when Motorola was at its peak. At that time, Motorola's market capitalization and brand value were among the highest in the US, even surpassing Microsoft. However, Nokia's subsequent rise in the mobile phone market and the emergence of the iPhone led to Motorola gradually losing its market dominance. Burry's remarks aim to remind investors that the technology industry changes extremely rapidly, and the current industry leadership is not a guarantee of perpetual success. The issuance of ultra-long-term bonds may simply mark the peak of a company's growth curve, rather than the beginning of sustainable prosperity.
Alphabet looking to issue a 100-year bond. Last time this happened was Motorola in 1997, which was the last year Motorola was considered a big deal.
At the start of 1997, Motorola was a top 25 market cap and top 25 revenue corporation in America. Never again.
The Motorola… pic.twitter.com/BuzrpPQj4u— Cassandra Unchained (@michaeljburry) February 9, 2026
This article, "Alphabet issues century-old bonds to bet on AI, shorting Burry to warn: it may follow in Motorola's footsteps," first appeared on ABMedia ABMedia .
