Alphabet calls out new AI-related risks, as it taps debt market to fund build-out

Alphabet has identified new risks related to artificial intelligence (AI) in its latest annual report, particularly concerning its core advertising business and substantial investments in AI infrastructure. The company highlighted potential challenges such as excess capacity from costly AI commitments and increased operational complexity due to significant leasing arrangements for compute capacity. To support its AI expansion, Alphabet plans to raise $20 billion through a multi-tranche bond sale, including a rare 100-year bond, reflecting the scale of its long-term investment strategy. The company’s capital expenditures could reach as high as $185 billion this year, more than double its 2025 spending, underscoring the aggressive push into AI technology and infrastructure. Alphabet’s long-term debt has already quadrupled in 2025 to $46.5 billion, signaling a major financial commitment to maintaining competitiveness in the AI space. CFO Anat Ashkenazi emphasized the importance of balancing investment with fiscal responsibility to preserve the company’s strong financial position. CEO Sundar Pichai expressed concerns about securing sufficient compute capacity amid constraints related to power, land, and supply chains, which are critical to meeting the surging demand for AI services. Alphabet’s move is part of a broader trend among major tech companies, including Microsoft, Meta, and Amazon, which are collectively expected to increase capital expenditures by 60% this year compared to 2025. These investments focus on acquiring advanced chips, building new data centers, and enhancing networking technology to support AI workloads. Central to Google’s AI ambitions is Gemini, its large language model and AI assistant, which aims to compete with other leading AI platforms. The company’s strategic financial and operational decisions highlight the growing importance of AI in shaping the future of technology and digital advertising.