Alphabet Joins Century Bond Club with Rare 100-Year Sterling Issue as Tech Giants Borrow Big for AI

Alphabet is preparing to issue a rare 100-year sterling bond, joining an exclusive club of companies that have tapped long-term debt markets to fund massive capital expenditure growth driven by artificial intelligence investments. The move comes as Big Tech companies increasingly turn to borrowing to finance their AI infrastructure buildouts, with Alphabet's deal expected to be part of a broader $15 billion bond sale.

The Century Bond Trend in Tech

The 100-year bond market has historically been the domain of universities, municipalities, and occasionally blue-chip corporations seeking to lock in ultra-low interest rates for generations. IBM broke ground in 1996 when it became one of the first major corporations to issue a 100-year bond, setting a precedent that few have followed.

Alphabet's potential entry into this market signals the extraordinary capital demands of the AI race. As companies compete to build out data centers, acquire specialized chips, and develop next-generation models, traditional funding sources are proving insufficient.

Why Big Tech is Borrowing Big

Several factors are driving this borrowing spree:

Capital Expenditure Surge: AI infrastructure requires massive upfront investment in specialized hardware, data centers, and energy infrastructure. The costs are staggering and growing.

Low Interest Rate Environment: Despite recent rate hikes, borrowing costs remain historically low, making long-term debt attractive for companies with strong credit ratings.

Shareholder Pressure: Tech companies face pressure to maintain growth and innovation while also returning capital to shareholders through dividends and buybacks.

Competitive Necessity: In the AI arms race, falling behind on infrastructure investment could mean losing market position permanently.

The Numbers Behind the Borrowing

Alphabet's planned $15 billion bond sale represents just one piece of a larger trend. The company raised $17.5 billion in November 2025, and reports suggest the current offering has attracted over $100 billion in orders, indicating massive investor appetite for tech debt.

This follows a pattern across the industry. Companies are essentially betting that the returns from AI investments will exceed the cost of borrowing over decades-long timeframes.

The Sterling Bond Angle

The choice of sterling for a 100-year issue is particularly interesting. Sterling bonds, or "gilts" in UK parlance, have historically been popular for ultra-long-dated issues due to the UK's stable political and economic environment. For a global company like Alphabet, issuing in multiple currencies helps diversify funding sources and tap different investor bases.

Market Implications

The flood of tech borrowing raises questions about market saturation and long-term sustainability. While current demand appears strong, there are limits to how much debt the market can absorb, especially as more companies enter the AI infrastructure race.

Additionally, the concentration of borrowing among a handful of tech giants could create systemic risks if AI investments don't deliver expected returns or if interest rates rise significantly.

Looking Forward

As AI continues to drive capital expenditure growth across the tech sector, expect to see more innovative financing approaches. The 100-year bond may be just the beginning, with companies potentially exploring even more creative ways to fund their AI ambitions.

The success of Alphabet's sterling bond issue could pave the way for other tech companies to follow suit, potentially making century bonds a regular feature of Big Tech's financing toolkit rather than the rare occurrence they've been historically.

For now, the market appears willing to bet on the AI future, providing tech giants with the capital they need to build it. Whether this bet pays off remains to be seen, but the scale of investment suggests companies are playing for keeps in the AI race.