"As Alphabet returns to the debt market to fund its artificial intelligence buildout, the company is acknowledging new risks tied to the rise of AI and its hefty investments in infrastructure. In its annual financial report late last week, the Google parent highlighted the potential impact of AI on the company's core advertising business and the possibility of ending up with "excess capacity" from its costly commitments. "To meet the compute capacity demands of AI training and inference, as well as traditional cloud computing services, we are entering into significant leasing arrangements with third party operators, which may increase costs and operational complexity," the company stated in the filing with the SEC."
"To help finance its AI ambitions, Alphabet is planning to raise $20 billion from a U.S. dollar bond sale, according people familiar with the matter who asked not to be named because the details are confidential. The planned sale would take place over four tranches, including a 100-year bond deal in sterling, the people said, with one adding that the deal is five times oversubscribed. Bloomberg first reported on the planned debt funding, which was originally expected to reach $15 billion."
Alphabet is increasing capital commitments to support AI training, inference, and cloud services, with guidance for capital expenditures rising as high as $185 billion. Significant leasing arrangements with third-party operators are being pursued to meet compute demand, which may increase costs and operational complexity and create the risk of excess capacity from infrastructure investments. Large commercial agreements could raise liabilities and obligations in the event of nonperformance by counterparties or vendors. Debt issuance plans include a roughly $20 billion multi-tranche bond sale, and long-term debt rose to $46.5 billion after prior bond activity.
Read at www.cnbc.com
Unable to calculate read time
Collection
[
|
...
]