Why is Google issuing century bonds?

Alphabet (Google's parent company, hereinafter referred to as Google) has just completed a massive $20 billion financing in the bond market.

Not only US dollar bonds, Google also plans to issue Swiss franc bonds, and even launch rare century-long pound sterling bonds. The last time such long-term debt was issued dates back to Motorola in the 1990s.

Why would a tech giant with over a hundred billion dollars in cash on its books, seen as the world's strongest "money printer," suddenly take on such large-scale debt? And why lock in such a long cycle?

To understand this move, we first need to see where this money is going.

According to the latest Q4 earnings report, Google expects its capital expenditure (Capex) for 2026 to reach a staggering $175 to $185 billion. This figure is almost double Google's annual Capex from a few years ago. These astronomical expenses all point to the same keyword: AI infrastructure.

Although the $20 billion bond seems like "a drop in the bucket" compared to the $180 billion expenditure, from a financial perspective, this might be the optimal solution to maintain balance sheet equilibrium: it raises the necessary funds without consuming the free cash flow originally intended for stock buybacks and dividends.

But the deeper signal lies in: Google may clearly realize that the underlying logic of its core business model is undergoing a qualitative change.

For the past two decades, Google Search's business model was extremely attractive: it distributed links. Users entered keywords, and Google returned ten blue links. The marginal cost of this "bit business" was almost zero; each additional search cost Google almost nothing extra in electricity.

But now, generative AI has changed all that. When users get used to asking AI directly for "answers" instead of sifting through links, the underlying logic of search changes. Every AI-generated answer requires massive computational power for inference in the background.

As I observed in my article a couple of days ago: Goodbye, Google Search

As an ordinary user, one can still perceive this shift in interaction. For management with a global perspective, the fear is only deeper.

Take another example: even the current hot favorite, Xiaohongshu, is now aggressively pushing its own "Ask and Answer" feature. What does it matter that it has accumulated so many images and texts? It still feels the panic.

Although Google has gained a foothold with Gemini 3 Pro, it is facing the classic "innovator's dilemma": it must personally destroy its own high-margin old search business to build an extremely costly new one. It is no longer just processing information; it is starting to consume vast amounts of energy and hardware.

This might be precisely the core logic behind Google issuing century bonds: duration matching.

AI data centers, land, and supporting energy facilities are all long-term assets with lifespans of twenty to thirty years. Using money raised from long-term bonds to invest in long-term assets avoids financial risk. It's like using a decades-long mortgage to buy a house, not a credit card.

We may be witnessing the most expensive transformation in internet history.

For Google, if the transformation fails and the search gateway is breached, the entire advertising empire will crumble, and the company's terminal value will be greatly diminished.

Therefore, even burdened with heavy debt, Google must engage in this "utility" business of the AI era, inevitably shifting from a light-asset company to a heavy-asset one.

For investors, this means the light, high-growth Google we are familiar with may be gone forever.

This isn't necessarily a bad thing, but it is indeed a brand new story.

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