Alphabet sells bonds worth $20 billion to fund AI spending

Feb 10 (Reuters) - Alphabet GOOGL.O said it sold bonds worth $20 billion in a seven-part offering, tapping the debt market to fund its surging spending on artificial intelligence infrastructure.

Big Tech's appetite for debt is surging, after years of relying on strong cash flows to fund investments.

Alphabet is also planning a debut sterling offering that may include a rare 100-year bond, the tech industry's first since a Motorola issuance in 1997, according to media reports.

Big Tech's pivot to the bond market, however, has raised investor concerns as payoffs have not kept pace with the huge AI spending from U.S. tech giants, while businesses adopting the technology have so far seen limited productivity gains.

Capital expenditure from Alphabet, Microsoft MSFT.O, Amazon.com AMZN.O and Meta Platforms META.O is expected to total at least $630 billion this year, with most of spending focused on data-centers and the AI chips that power them.

The seven tranches of Alphabet's dollar notes mature every few years, starting in 2029, and go all the way up to 2066, according to a regulatory filing on Tuesday.

Some analysts said Big Tech's greater use of debt reflects a pivot from asset-light models toward long-term infrastructure.

"Century bonds are usually the preserve of governments or regulated utilities with very predictable cash flows, so this deal shows that, at least for now, investors are willing to take on very long-dated risk tied to AI investment," said Lale Akoner, global market analyst at eToro.

Oracle ORCL.N had also disclosed a $25 billion note sale on February 2 in a securities filing.

The AI hyperscalers - a group that also includes Oracle - issued $121 billion in U.S. corporate bonds last year, according to a January report by BofA Securities.