GOOG stock is rallying right alongside the VIX. That doesn’t usually happen. The VIX tracks fear in markets, so when it’s going up, stocks are usually falling down, especially the big boys.
GOOG is up by 2% today, and the VIX is up 1.2%, per data from Google Finance.
So why the green candles for Google, you wonder? Well, it is all about a historic debt sale. Alphabet is raising cash in a way we haven’t seen from a tech company in decades.
Alphabet is about to sell a 100-year bond, priced in British pounds. It’s selling five different bond chunks in sterling. One of them will not mature until the year 2126.
And listen, this is the first time any tech company has tried something like this since Motorola did it in 1997. Usually, it’s governments or colleges that issue these century bonds.
Companies don’t touch them, because a hundred years is too long to plan for when you’re in tech.
Big Short’s Mike Burry already made this comparison in a post on X, making it clear that he is bearish on GOOG, though keep in mind that this is the guy who has called 20 of the past 2 market crashes.
The 100-year bond is just one piece. Alphabet is also selling $20 billion worth of US dollar bonds, way more than the $15 billion people expected. Demand for this deal went crazy. Orders crossed $100 billion at the peak. This is now one of the biggest corporate bond offerings ever. And it’s all because of the AI race.
The bond that matures in 2066 is being sold at a tighter premium. Earlier, it was 1.2 percentage points above Treasuries. Now it’s just 0.95 percentage points. That means buyers are accepting less payout. They’re chasing anything tied to AI, and Alphabet is right in the middle of it.
Last week, Alphabet said it’s planning to spend up to $185 billion on capital projects this year. That’s more than what it spent in the last three years put together. Most of this money is going into building data centers and buying AI chips. Morgan Stanley’s Brian Nowak said on CNBC that Alphabet might even spend $250 billion by 2027.
Several banks are helping run the bond sale. JPMorgan, Goldman Sachs, and Bank of America are handling the US side. Deutsche Bank, Royal Bank of Canada, and Wells Fargo are involved too. All of them kept their mouths shut when asked about the deal.
Tech companies are cutting cash flow to keep up with AI growth
Last year, the four biggest US internet companies pulled in $200 billion in free cash flow, which is actually down from $237 billion in 2024. All this AI investment is eating into profits. But they’re still loaded with cash. By the end of the last quarter, these four companies had over $420 billion combined, just sitting in cash or equivalents.
That’s a huge edge over AI startups like OpenAI and Anthropic, which are fast and flashy, but they don’t have Alphabet’s wallet.
Deutsche Bank analysts said last week that Alphabet’s spending is building what they called a “meaningful moat.” That’s a nerdy way of saying they’re trying to block out competitors.
Big companies continue testing AI tools that build apps just by typing a few words, which, of course, takes serious computing power. Cloud providers like Alphabet are seeing massive demand for that power, as it’s pushing them to invest even more.
Still, not everything is smooth. Some folks are worried. If OpenAI stumbles, it could hit the entire market hard. That company has over $1.4 trillion in AI deals lined up. If things go wrong there, the mess could spread.
