To meet projected AI capital expenditures soaring to $725 billion, Silicon Valley giants are on a global bond-issuance spree. Cross-currency bond offerings have become the go-to strategy for tech titans to snag low-interest loans.
Amazon and Google parent Alphabet are leading this multinational arbitrage. After setting a euro bond issuance record in March, Amazon is now preparing its first Swiss franc bond with maturities ranging from 3 to 25 years. Alphabet, which has raised its capex forecast to $190 billion this year, has been issuing bonds in euros, Canadian dollars, and Swiss francs, and is now planning its first foray into the yen market. Bloomberg analysts note that by tapping into ultra-low interest rates in Japan and Europe, these two giants can raise enormous sums at minimal cost, continuing their aggressive GPU spending without sacrificing financial flexibility at home.
Meta, meanwhile, is struggling with the same 'borrow to buy compute' playbook. Despite completing a $25 billion investment-grade bond offering, the company was hit with higher risk premiums after Mark Zuckerberg admitted on the earnings call that he lacked a 'precise plan' for monetizing AI. Subscriptions also fell dramatically. In stark contrast, Microsoft is the only one of the Big Four that is funding its massive AI expenditures purely through its strong operating cash flow, completely sidestepping the debt rush.