NEW YORK—Alphabet Inc. (GOOGL) launched a $25 billion bond offering, its second large debt issuance this year, pushing credit spreads wider across the hyperscaler sector and sending its shares down 0.7 percent to $360.06. The deal reflects a growing reliance on debt financing as the company accelerates spending on AI infrastructure.
Hyperscalers are pouring capital into data centers and specialized hardware to stay competitive in AI. Analysts see the repeated large issuances as pressure on balance sheets that have historically generated strong free cash flow.
Microsoft Corp. (MSFT) rose 1.9 percent to $496.94, but its bond spreads widened alongside Alphabet's, reflecting a broader repricing of tech debt. Amazon.com Inc. (AMZN), up 0.1 percent to $273.02, faces capital expenditure pressure at its Amazon Web Services division. Meta Platforms Inc. (META), up 0.4 percent to $591.32, has committed heavily to AI development and could follow with its own debt issuances as competition intensifies.
Wider credit spreads mean a higher cost of capital for these companies, which compresses earnings multiples and reduces shareholder returns. We rate Alphabet a Hold with a $375 price target, given near-term pressure from rising interest expenses and sustained capital intensity. Watch debt-to-equity ratios and free cash flow closely—those are the numbers that will move the stock.
