Global Big Tech companies are moving forward with large-scale bond issuances to secure funds for artificial intelligence (AI) infrastructure investments. Alphabet, Google's parent company, is pushing for a €6 billion (approximately 9 trillion KRW) bond issuance, while Meta is reviewing plans to raise at least $20 billion (approximately 26.9 trillion KRW). Despite growing market concerns about the profitability of AI investments, the competition among Big Tech firms to secure investment funds is intensifying.
According to Reuters on the 2nd (local time), Alphabet has started issuing €6 billion in corporate bonds in the European bond market. The bonds consist of seven types with maturities ranging from 2 to 19 years—six fixed-rate bonds and one floating-rate bond. Investment demand exceeded €17 billion, about 2.8 times the planned issuance amount.
This is Alphabet's second euro-denominated bond issuance this year. In May, it issued €9 billion in bonds, and in February, it issued a 100-year pound-denominated bond. The funds raised this time will be used for general corporate operations, including repaying existing debt.
Meta is also pursuing large-scale funding. According to Bloomberg, Meta is considering raising at least $20 billion through U.S. dollar and euro-denominated bonds. The issuance size may expand depending on investor demand.
Meta has requested meetings with Citigroup and Morgan Stanley to brief investors. The dollar-denominated bonds are expected to have maturities of 5 to 30 years, while euro-denominated bonds are projected to range from approximately 4 to 38 years. However, the issuance details and scale have not been finalized.
Meta is also proceeding with equity issuance for funding. Last month, it announced plans to issue approximately $97.5 billion in shares, with up to $60 billion to be raised through periodic sales in the market.
The Big Tech firms' expanded bond issuances are closely tied to massive AI infrastructure investments. Alphabet expects its capital expenditure this year to reach up to $205 billion. As of the end of September, future payments for undeveloped lease agreements amount to $130.5 billion, mostly related to data centers. Meta also forecasted its capital expenditure for this year to be between $135 billion and $145 billion.
Market caution over investment burdens is also rising. Alphabet's stock price plummeted 12.6% the day after its Q3 earnings announcement on the 29th of last month. Meta also faces growing concerns about its creditworthiness due to worsening cash flow from expanded AI investments. S&P Global Ratings recently lowered Meta's credit rating outlook from “Stable” to “Negative.”
As competition in AI infrastructure investments continues, global Big Tech's reliance on bond markets is expected to increase. However, whether these large-scale investments will translate into actual profits will likely determine future funding conditions.
