Alphabet Stock Hovers Above $340
The company's stock price tests $338.91 support as bears press, while it raises $3.89 billion in its inaugural Australian dollar bond issuance to fund massive AI spending
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Alphabet's bond sale sets a record as the largest corporate bond sale in the Australian market at A$5.5bn.
Story published. The company's stock price tests $338.91 support as bears press, while it raises $3.89 billion in its inaugural Australian dollar bond issuance to fund massive AI spending
Alphabet's stock price is hovering above $340 support, testing $338.91 Fib support, as bears continue to press. Meanwhile, the company has raised $3.89 billion in its inaugural Australian dollar bond issuance, which includes 3-, 5-, 10-, and 20-year bonds.
The bond issuance is expected to support the company's massive AI spending, with the coupon for the longest tenure bond tranche set at 6.9%. This move is part of a larger trend among global tech companies, which are expected to spend more than $730 billion on AI this year.
The funds raised from the bond issuance will likely be used to fuel Alphabet's AI investments, which are becoming increasingly costly. In its second-quarter report in late July, Alphabet posted its first ever negative free cash flow, indicating that the company's cash reserves are being squeezed by its investments in AI.
## Why it matters The massive spending on AI by global tech companies, including Alphabet, is having a significant impact on their cash flows. As these companies continue to invest heavily in AI, they are turning to capital markets to fund their investments, rather than relying on their cash reserves. This trend is likely to continue, with global tech companies expected to spend more than $730 billion on AI this year.
The successful bond issuance by Alphabet is a positive sign for the company, as it demonstrates its ability to raise funds to support its investments in AI. However, the company's negative free cash flow and the pressure on its stock price are reminders of the challenges it faces in its efforts to invest in AI while maintaining its financial health.
