Alphabet is raising $20 billion through a U.S. dollar bond sale to finance its aggressive artificial intelligence expansion, while also warning investors of new risks tied to the fast-evolving AI landscape. In its latest SEC filing, the Google parent company highlighted concerns over the potential impact of AI on its core advertising business, including the risk of reduced search usage and the possibility of overinvesting in compute capacity. To meet the soaring demands of AI training and inference, as well as traditional cloud services, Alphabet is entering into major leasing agreements with third-party providers. These arrangements, while necessary, could increase costs and operational complexity. The company also warned that large commercial contracts could lead to heightened liabilities if it or its partners fail to fulfill obligations. The scale of Alphabet’s capital expenditure plans underscores the intensity of the AI race. The company now expects to spend up to $185 billion this year—more than double its 2025 capex—making it one of the largest investors in AI infrastructure. The planned $20 billion debt offering, which will be issued in four tranches including a 100-year sterling bond, is already five times oversubscribed, according to people familiar with the matter. This follows a $25 billion bond sale in November, which helped grow Alphabet’s long-term debt to $46.5 billion in 2025—four times its level from the previous year. Alphabet’s CFO Anat Ashkenazi emphasized the importance of fiscal responsibility during the recent earnings call, stating the company aims to invest aggressively while maintaining a strong financial position. CEO Sundar Pichai revealed that the biggest challenge keeping executives awake is securing compute capacity, citing constraints in power, land, and supply chains as critical hurdles in scaling up to meet unprecedented demand. This year, Alphabet, Microsoft, Meta, and Amazon are collectively projected to increase capital spending by more than 60% compared to the already high levels seen in 2025. The investments are focused on acquiring high-end chips, constructing new data centers, and deploying advanced networking systems. At the heart of Google’s AI strategy is Gemini, its flagship large language model and AI assistant, which is competing directly with OpenAI’s ChatGPT and Anthropic’s Claude. Pichai reported that the Gemini app now has over 750 million monthly active users—up from 650 million just a quarter earlier—demonstrating strong user adoption. Despite growing AI usage, Google remains cautious about the long-term effects on its advertising model. The company acknowledged for the first time in its financial filing that generative AI could reduce reliance on traditional search, potentially disrupting its dominant ad business. It admitted there’s no guarantee it can successfully adapt with new ad formats and strategies. However, in the fourth quarter, ad revenue still rose 13.5% year-over-year to $82.28 billion, showing that the business remains resilient.