Alphabet Raises €3 Billion in European Bond Sale to Accelerate AI and Cloud Infrastructure Investment

Google-parent Alphabet, Inc. (GOOGL) is selling at least €3 billion (approximately US$3.5 billion) in bonds across six tranches with maturities ranging from three to 39 years to finance its aggressive investment in artificial intelligence and cloud infrastructure. This marks Alphabet's second euro bond sale in 2025, following a €6.75 billion offering earlier this year that attracted significant investor demand.

The bond issuance coincides with Alphabet's record capital expenditures, which are projected to reach between $91 billion and $93 billion annually, primarily directed toward data center construction, AI chip purchases, and networking equipment. In the third quarter, Alphabet reported sales of $87.5 billion, driven by a 33.5% year-over-year increase in Google Cloud revenue to $15.2 billion, surpassing estimates. Revenue from generative AI products surged by over 200% annually, validating the massive infrastructure push.

According to Chief Financial Officer Anat Ashkenazi, servers accounted for over 60% of capital expenditures in the most recent quarter, highlighting the focus on scaling AI operations. Google Cloud has secured a $155 billion backlog of unfulfilled contracts, including a multibillion-dollar deal with AI start-up Anthropic for specialized processors. Analysts like Angelo Zino of CFRA Research noted that the cloud backlog provides "strong visibility into future performance" and demonstrates effective spending.

The bond sale is managed by joint global coordinators and bookrunners, including BNP Paribas, Crédit Agricole CIB, Deutsche Bank, Goldman Sachs, HSBC, and JPMorgan. Pricing for the tranches was expected to be announced on November 3, with the three-year tranche priced around 60 basis points over mid-swaps and the 39-year tranche at approximately 190 basis points over the benchmark. Alphabet's strong credit ratings (Aa2 from Moody's and AA+ from S&P) help keep borrowing costs manageable.

This move aligns with a broader trend among U.S. tech giants, as Meta recently prepared for a $25 billion bond issuance, and Oracle secured $38 billion for AI infrastructure. Morgan Stanley estimates that large companies will invest approximately $3 trillion in data centers and related infrastructure between 2025 and 2028, with cash flows covering about half of that total. The competitive landscape, including rivals like Microsoft and Amazon, drives this capital-intensive race to dominate AI development.