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Big Tech's AI Borrowing Fuels Global Bond Sales
12 May
Summary
- Alphabet and Amazon are issuing bonds in Japan and Switzerland.
- Big Tech companies are expected to spend over $700 billion on AI.
- Companies are increasingly relying on debt for AI infrastructure funding.
As the demand for artificial intelligence continues to surge, major technology firms are intensifying their borrowing activities beyond U.S. borders. Alphabet, the parent company of Google, is set to issue its first bond denominated in Japanese yen. Concurrently, Amazon is preparing to launch its inaugural debt offering in Swiss francs.
These significant overseas bond sales underscore the substantial financial requirements of the current AI race. Big Tech companies are anticipated to collectively invest over $700 billion in AI infrastructure this year, a notable increase from previous years. This escalating expenditure is prompting these tech giants to rely more heavily on debt financing.
Alphabet has engaged Mizuho, Bank of America, and Morgan Stanley for its upcoming yen-denominated transaction. Recently, the company also secured nearly $17 billion through bond sales in euros and Canadian dollars. Amazon, meanwhile, has mandated several banks, including BNP Paribas and JPMorgan Chase, for its multi-part debt offering.
The proceeds from Amazon's issuance are earmarked for general corporate purposes, potentially covering business investments and future capital expenditures. This global debt-raising strategy reflects the companies' strong creditworthiness and their need to secure vast sums for AI-related initiatives.
