TL;DR — Alphabet sold $20 billion of US dollar bonds in February 2026 while holding $126.8 billion in cash and securities. It is not liquidity stress. Deductible interest, Aa2/AA+ credit and a 2026 capex plan far above free cash flow make cheap debt the rational funding choice.
Alphabet is back in the credit markets. According to Bloomberg, the company raised $20 billion from a US dollar bond sale on February 9, 2026, above an initial target of $15 billion, with orders reported above $100 billion. To a casual observer this looks paradoxical. Why would a company holding more than $100 billion in cash take on more debt?
The balance sheet answers part of it. At December 31, 2025, Alphabet held $126.8 billion in cash, cash equivalents and marketable securities against $46.5 billion of long-term debt. This is not a sign of liquidity stress. It is a cost-of-capital decision, and the plumbing matters more than the headline.
Deductible Interest Puts the After-Tax Cost of This Debt Below 4%
The US notes priced in seven tranches maturing from 2029 to 2066, with coupons from 3.70% to 5.75%, according to the closing 8-K filed on February 13. Interest is generally deductible for corporate tax purposes. At the 21% federal rate, the 4.80% notes due 2036 cost roughly 3.8% after tax.
That is cheap money for a company of this quality. The offering documents list Alphabet’s ratings as Aa2 from Moody’s and AA+ from S&P, both stable. Few corporate borrowers can issue at spreads this close to Treasuries across a 40-year curve.
The carrying cost is manageable at this scale. The 2025 10-K shows $48.5 billion of senior notes outstanding at year-end, with $1.8 billion of interest due over the next twelve months. Against $129 billion of 2025 operating income, the interest bill on the new paper does not move the needle.
The older argument about trapped overseas cash carries less weight than it used to. Since the 2017 tax law, most foreign earnings can return without a second layer of US federal tax, although foreign withholding taxes can still apply. The case for borrowing today rests on cost and timing, not on repatriation.
Debt-Funded Buybacks Would Swap Expensive Equity for Cheap Debt
The textbook reason to borrow while cash-rich is a capital structure swap. Equity is the most expensive capital a company has, because shareholders demand a higher return than bondholders. Replacing some equity with fixed-rate debt lowers the weighted average cost of capital and mechanically raises earnings per share.
Alphabet had the authorization in place. Its board approved a $70 billion repurchase program in April 2025, and $69.5 billion remained available at year-end. In 2025 the company retired 240 million shares for $45.4 billion. We walk through the program in our practical breakdown of Alphabet’s buybacks.
The cash flow statement already showed a shift, though. Repurchases fell to $5.5 billion in Q4 2025 from $15.6 billion a year earlier. Debt was making room for something larger than buybacks.
The Real Driver Is a Capex Bill Larger Than Free Cash Flow
Alphabet generated $73.3 billion of free cash flow in 2025. Five days before this bond sale, it guided 2026 capital expenditures to $175 billion to $185 billion. That gap, not a lack of cash, explains the timing.
Borrowing now does four things at once:
- Funds the AI build-out of TPU clusters and data centers without draining the cash pile;
- Locks in rates for up to 40 years in dollars, and longer in sterling, before credit conditions can tighten;
- Preserves optionality for acquisitions, Other Bets or a slowdown that demands liquidity on short notice;
- Diversifies investors, with a concurrent £5.5 billion sterling offering that included a 100-year tranche.
Alphabet is not borrowing because it needs money. It is borrowing because debt is the cheapest way to pay for an investment cycle larger than its cash flow.
The sterling deal drew attention for the 6.125% notes due 2126, a century bond. A company that can sell 100-year paper is signaling how lenders view the durability of its cash flows. It is a defensive move dressed in offensive clothing.
Update: Alphabet Kept Borrowing and Stopped Buying Back Stock
Update, October 2026. The February deal was the start of a funding program. Alphabet reported $31.1 billion of net proceeds from senior notes in Q1 2026 and $20.3 billion in Q2, including its first yen-denominated bonds. Long-term debt reached $98.2 billion by June 30.
The buyback leg of the thesis reversed. Alphabet repurchased no stock in the first half of 2026 and, in June, raised $49.6 billion by selling Class A and Class C shares and mandatory convertible preferred stock. We cover the dilution side in our note on the buyback cut and stock compensation.
The original question now applies with more force. Cash and marketable securities stood at $242.5 billion on June 30, nearly double the year-end level, while capex guidance rose to $195 billion to $205 billion. Alphabet is raising capital from every channel at once, because the investment cycle is larger than any single one of them.
What to watch next: quarterly interest expense against operating income, any rating agency commentary, further use of the $40 billion at-the-market equity program, and whether repurchases resume once free cash flow turns positive. The debt is cheap. The question is how long the capex cycle runs before cash flow catches up.
Sources: Alphabet Form 8-K of February 13, 2026, the Q4 2025 earnings release, the 2025 10-K and 2026 10-Qs on SEC EDGAR; quarterly materials at Alphabet Investor Relations; bond sale reporting by Bloomberg. Disclosure: the author is a long-term holder of Alphabet (GOOGL/GOOG). This is not investment advice. The full disclosure is on our About page.
