Alphabet bets on AI with century bonds, Burry warns: risk of following Motorola's footsteps

Alphabet completes its largest-ever dollar bond issuance on Monday, successfully raising $20 billion to fund its massive artificial intelligence (AI) development plans. Despite market concerns over the surge in capital expenditure by tech giants, investor response to this bond issuance has been enthusiastic, with order totals exceeding $100 billion, indicating strong market confidence in its creditworthiness. Analysts estimate that this AI-driven financing wave will push this year’s investment-grade bond issuance to a record high and may reshape the risk and return structure of the corporate bond market. However, there are also skeptics; Michael Burry, the protagonist of the film “The Big Short,” remains bearish, pointing out that Motorola, which issued a century bond last time, is now a shadow of its former self.

Market Shows High Confidence in Tech Giants’ Creditworthiness

Although Alphabet expects its capital expenditure to hit new heights this year, investor demand for its bonds remains robust. According to Bloomberg, this $20 billion issuance exceeded the original forecast of $15 billion and attracted over $100 billion in orders, reflecting a positive outlook on the company’s long-term debt repayment ability. Notably, Alphabet plans to issue a rare “century bond” in the UK, marking the first attempt by a tech company to pursue such ultra-long-term financing since the late 1990s internet bubble. For the dollar bonds, the 2066 maturity (40-year) bonds have a yield only 0.95% above U.S. Treasuries, lower than the previously discussed 1.2%, indicating a tightening of credit spreads and that investors are willing to accept lower risk premiums to hold the company’s debt.

AI Arms Race Drives Historic Capital Expenditure

The core driver behind this bond issuance is the fierce AI arms race among tech giants. Alphabet estimates its capital expenditure will reach $185 billion this year, surpassing its total for the past three years combined, primarily directed toward data centers and cloud infrastructure. Forecasts suggest that the combined capital expenditure of the four major U.S. tech companies will reach approximately $650 billion by 2026. This atypical capital cycle indicates that these companies are actively leveraging debt financing to secure computing resources in hopes of dominating the future AI economy. While such massive spending raises concerns about financial burdens, Alphabet emphasizes that AI technology has already begun to boost revenue growth in search business, aiming to demonstrate the tangible return potential of these early investments.

Potential Impact of Massive Bond Issuance on Credit Markets

As companies like Oracle, Amazon, and Meta expand their spending, Wall Street faces a wave of bond supply. Morgan Stanley estimates that the total borrowing by these mega-players will surge from $165 billion in 2025 to $400 billion this year, potentially driving overall investment-grade bond issuance to a record $2.25 trillion. Some credit strategists warn that such a large supply could lead to wider credit spreads, increasing corporate financing costs. Strategists compare the current situation to market cycles in 1997 and 2005, when credit performance lagged but did not signal the end of the economic cycle. This suggests that although the bond supply glut may cause short-term pressure, the overall credit market structure has not yet entered a systemic risk phase.

Michael Burry’s Historical Caution from “The Big Short”

In response to market optimism, Michael Burry, the real-life figure behind the film “The Big Short,” offers a sobering historical perspective. He points out that the last time a tech giant issued a century bond was in 1997, by Motorola, which was then at the peak of its market value and brand recognition in the U.S., even surpassing Microsoft. However, subsequent developments—such as Nokia’s rise in the mobile market and the advent of the iPhone—led Motorola to lose its market dominance. Burry’s comments serve as a reminder that the tech industry’s rapid evolution means current industry leaders are not guaranteed eternal success. The issuance of ultra-long-term bonds may well mark the peak of a company’s growth curve rather than the beginning of sustainable prosperity.

Alphabet looking to issue a 100-year bond. Last time this happened was Motorola in 1997, which was the last year Motorola was considered a big deal. At the start of 1997, Motorola was a top 25 market cap and top 25 revenue corporation in America. Never again. The Motorola… pic.twitter.com/BuzrpPQj4u

— Cassandra Unchained (@michaeljburry) February 9, 2026

This article on Alphabet’s century bond bet on AI and Burry’s warning of potential parallels with Motorola first appeared on Chain News ABMedia.