Alphabet's AI Push Lifts Funding Needs Amid Rising Debt Costs

Alphabet Inc., parent company of Google, is set to pay around 7% on long-dated Australian debt as it continues to invest heavily in artificial intelligence (AI). The tech giant is reportedly looking to raise approximately A$5 billion ($3.5 billion) through a multi-part bond sale, with the Australian deal following a $25 billion raise in the U.S. bond market this year.

The company's 20-year tranche is being quoted at around 6.95%, but final pricing may vary. Alphabet is also selling bonds with maturities of three to ten years. The increased focus on AI has led to a significant increase in funding needs, with even the company's strong balance sheet relying on debt to support expansion.

The capital intensity required for Alphabet's AI buildout is substantial, and long-term borrowing costs are nearing 7%. This move highlights the growing reliance of tech companies like Google on debt financing to support their ambitious expansion plans.