Unbreakable: They claim to be alive in 2126. The giant’s next move
They bet that they will live for another 100 years.
In the world of technology, five years is an eternity, and a decade is an era. So when one of the world’s largest corporations asks investors to lend money not for ten, but for a hundred years, it makes even the most experienced Wall Street wolves cower. That’s exactly what Alphabet, the parent company of Google, did this week.
The company issued an extremely rare 100-year bond and, in less than 24 hours, raised a mind-boggling amount of almost thirty-two billion dollars. This is not just a financial operation. It is a signal that the race for artificial intelligence (AI) is moving to a whole new level of astronomical costs, and investors are blindly believing that the search giant will dominate the world even when our grandchildren are grandparents.
Why does the richest company borrow?
Many may have a logical question: why does a company that is simply swimming in cash borrow money? Alphabet’s market value today is almost four trillion dollars, and its available capital is one hundred and twenty-six billion in cash.
It generates more than seventy-three billion dollars in free cash flow every year. However, even such huge reserves are no longer enough for the ambitions dictated by the new reality. The company decided to take advantage of the favorable situation in the market to finance investments in artificial intelligence, which have gained a crazy pace.
The plans announced show that this year alone, Google plans to double its spending on AI infrastructure, servers, and research to a staggering $185 billion. This is a war for future dominance, and Alphabet doesn’t want to use its savings alone. By issuing bonds in US dollars, pounds, and Swiss francs, it is securing cheap capital for the long term.
Demand has been so overwhelming that investors’ willingness to lend has exceeded supply by almost ten times. This shows that market participants see artificial intelligence not as a bubble, but as an inevitable engine of the future economy.
History lessons: the shadows of IBM and Motorola
However, 100-year bonds are a risky game in the business world. Typically, such instruments are issued by governments or universities, such as Oxford or Harvard, which have existed for centuries and are likely to exist for many more.
Corporations rarely dare to look that far ahead, because business cycles are merciless. History contains many cases when technology giants, seemingly invincible, lost their luster within a few decades.
For example, in 1996, IBM, the king of technology, also issued a hundred-year bond. At that time, no one could imagine a world without IBM’s dominance, but soon Microsoft and Apple entered the arena, pushing the old giant into the background.
An even sadder example is the retail chain JCPenney, which successfully sold half a billion dollars’ worth of centennial bonds in 1997, but went bankrupt twenty-three years later, leaving investors with worthless securities.
Motorola suffered a similar fate, which went from being a telecommunications leader to a mere shadow of what it was thirty years ago. Therefore, investing in Google for a hundred years is a bet not only on technology, but also on whether this company will be able to avoid the fate of its predecessors.
Who buys that kind of risk?
Despite historical warnings, confidence in Alphabet is currently ironclad. Such long-term bonds are usually bought not by ordinary speculators, but by institutional investors – pension funds and insurance companies that have long-term obligations to their clients and are looking for a haven for their money. To them, Google today seems safer than many countries.
A recent court ruling has also contributed significantly to this optimism. Although Google was found to have violated antitrust laws, the court did not order the company to break up or radically change its business model. This calmed the markets and freed up its hands to borrow.
Investors are sending a clear message: they believe that artificial intelligence is not a short-term fad, and that Alphabet has enough resources and intelligence to remain a dominant force even as technological eras change. Whether this belief will be justified will be known in 2126, but today, Google has an additional $ 32 billion in its accounts, intended to create a future in which it will still be queen.
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