In this financing, long-term investors such as insurers and pension funds used real capital to express confidence in Alphabet’s creditworthiness over the next hundred years. Meanwhile, equity traders expressed concern about the earnings outlook over the next several years through selling pressure.

Why Were Century Bonds So Heavily Oversubscribed?

Bond investors—especially buyers of centennial bonds—operate on a fundamentally different decision framework from stock investors. Their primary focus is not explosive growth, but repayment safety and certainty across multiple economic cycles.

Locking in ultra-long maturities to match the nature of AI infrastructure: Alphabet’s issuance of a centennial bond is the first such move by a technology company since the internet bubble era. This extreme step sends a strong strategic signal: the company is treating AI infrastructure (such as data centers and compute networks) like century-scale projects akin to bridges or railways, and the financing tenor needs to match the useful life of the assets. For pension funds and insurers with long-duration liabilities, such ultra-long assets are rare tools for achieving asset-liability duration matching.

A display of financial strength and unprecedented demand: Oversubscription of more than seven times—and in some cases close to ten times—was driven first and foremost by Alphabet’s top-tier credit rating (AA) and a solid balance sheet. Investors believe that even over a century, despite technological shifts, cash-generating businesses centered on Google Search and the Android ecosystem can still support its debt-servicing capacity as “infrastructure for the digital era.” The multi-currency structure—covering U.S. dollars, Swiss francs, and British pounds—also showcases the company’s ability to tap global liquidity and optimize funding costs.

In short, the bond market’s frenzy is an affirmation of Alphabet. Investors are not betting on whether it will win the AI race; they are betting on whether it can remain a durable force in the future technology landscape and continue producing stable cash flow. As HSBC strategists noted, while no one can predict the AI landscape a century from now, the probability of Alphabet’s continued existence remains very high.

So Why Did the Stock Fall?

Unlike bond investors’ “long-term survival logic,” equity investors follow a “growth-and-return logic.” Alphabet’s weak share performance directly reflects deep market anxiety over the nearly doubled capital expenditure plan it recently announced.

A sudden surge in capital intensity squeezes profit expectations: On the eve of the bond issuance, Alphabet guided capital expenditure for 2026 at a staggering one hundred seventy-five to one hundred eighty-five billion dollars—roughly double last year. Annual spending approaching two hundred billion dollars is larger than the GDP of many small and mid-sized countries. While the market expected AI investment, the aggressiveness of the increase was still shocking. Massive capex directly erodes free cash flow, and free cash flow is key to supporting high tech valuations and share buybacks. The market is now concerned that enormous investment may deliver diminishing marginal returns.

The “AI monetization exam” has reached a tipping point: Investors have lost patience with the AI story across big tech, and focus has shifted fully toward “commercial validation.” Although Alphabet’s cloud business delivered strong growth of forty-eight percent in the latest quarter, it did not offset doubts about overall return on investment. When the scale of future spending becomes this large and this specific, investors naturally demand a clearer and more immediate path to profitability. If AI investment cannot form a healthy commercialization loop over time, the market will “vote with its feet” without hesitation.

Macro rates and the shadow of history: Large-scale debt issuance increases bond supply, which can put upward pressure on yields. In a “higher for longer” rate environment, growth stock valuation models—built on discounting distant future cash flows—come under stress. History is also ringing alarm bells: the last time tech companies broadly issued ultra-long bonds was during the late-nineteen-nineties internet bubble. Well-known investors such as Michael Burry have also warned that centennial bonds often appear near cycle peaks. These historical analogies add a layer of shadow to today’s optimism.

Key Takeaways for the Market

The AI race has entered a brutal phase of “balance-sheet competition”: Giants that can lock in ultra-long funding at low cost gain a meaningful edge in the arms race. Alphabet’s move sets a benchmark for peers such as Microsoft and Amazon.

Equity-market logic has fully shifted: “Stories” and “parameters” no longer move investors—“cash flow” and “returns” do. Companies that cannot prove AI investment can generate excess returns will face continued pressure from valuation re-rating.

Alphabet’s challenge is now clear: It has successfully answered the question of “where the money comes from.” All pressure now concentrates on “how the money becomes more money.” The market will closely watch quarterly cloud growth, capex efficiency, and any new progress in AI monetization.

Overall, Alphabet has used bonds to secure its “eligibility to compete” for the next century. But whether it can deliver rich shareholder returns at the AI table—that real contest is only just beginning.