Alphabet & The Algorithmic Golems

Right then. Everyone’s flapping about the possibility of an ‘Artificial Intelligence Bubble’ as if bubbles were a new phenomenon. Honestly, you’d think humanity hadn’t seen enough inflated expectations burst over the centuries. We had the South Sea Bubble, the Tulip Mania… and now, algorithms. It’s all remarkably consistent, really. The principle remains the same: something shiny, something promising, and a great deal of people pretending to know what they’re doing. Whether this particular bubble will pop is a matter for the tea leaves and the Guild of Alchemists and Venture Capitalists (who, let’s be honest, are often indistinguishable from each other). But even if it does, the idea that all this ‘intelligence’ will simply vanish is… well, it’s a bit like suggesting that once the candles are blown out, the darkness ceases to exist. The darkness, my friends, always remains.

There are companies, naturally, that are positioning themselves to not merely survive a potential downturn, but to thrive in it. To scoop up the remnants of shattered dreams and turn them into… well, more algorithms. And one, in particular, is looking remarkably well-equipped. It’s a name you’ve almost certainly heard before, mostly because it’s been attempting to index the entire world for the last couple of decades.¹

The Old Guard (and Their Shiny New Golems)

Alphabet (GOOG 1.10%), the parent company of that ubiquitous search engine, Google, is a veteran of market corrections. They saw the dot-com crash come and go, emerging, if not unscathed, then at least sufficiently well-funded to buy the wreckage. Ask Jeeves, for instance. A charmingly antiquated notion, isn’t it? Like a butler made of steam.² The point is, experience matters. And a rather large war chest helps.

These days, Alphabet is becoming something of a standout in the AI arena. Their headline offering, Google Gemini, is rapidly gaining ground in the ‘Large Language Model’ space, which, if you translate from marketing-speak, means it’s getting rather good at stringing words together in a way that vaguely resembles human thought.

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Richer Than Midas (and Just as Prone to Turning Things to Gold)

In 2025, Alphabet generated a rather staggering $402.8 billion in revenue – a 15% increase over the previous year. Operating income neared $130 billion, with an operating margin of 32%. Earnings per share surged an incredible 34% to $10.81. Numbers like that tend to attract attention. And, inevitably, scrutiny.

The concern on Wall Street revolves around capital expenditure (capex). Alphabet anticipates spending $175-$185 billion in 2026. That’s a significant increase, and it’s largely down to one thing: data centers. These are the digital cathedrals of the 21st century, and they are neither cheap to build nor to maintain.

But if anyone can afford to build a vast network of data centers without collapsing under the weight of their own ambition, it’s Alphabet. Even as they expand their infrastructure, they managed to grow their cash reserves by 30% to $30.7 billion. It’s a bit like a dragon accumulating gold. Eventually, it just becomes… inconvenient.

To further finance their AI endeavors, Alphabet is issuing a 100-year bond. A rather bold move, wouldn’t you say? Like betting on the longevity of the human race itself.

Century Bonds (and the Art of Extremely Long-Term Thinking)

Only a handful of entities have issued bonds with such extended maturities. Disney and Coca-Cola, for instance. Even Argentina, Austria, and Mexico have dabbled in the art of extremely long-term debt. There’s even a 400-year-old bond from the city of Utrecht in the Netherlands that still pays interest. It’s a testament to the enduring power of bureaucracy, really.

Alphabet aims to raise $20 billion from this bond sale, which includes a significant portion of 100-year bonds. Despite a previous $2.5 billion bond sale in November 2025, Alphabet’s long-term debt stands at $46.5 billion, with total liabilities at $180 billion.

However, their total current assets stand at $206 billion, including that comfortable $30 billion in cash reserves. So, I’m not particularly worried about Alphabet’s ability to manage its debt. Especially considering their profitability and continued growth. Gemini is just getting started, and should become an even more significant revenue stream.

Sundar Pichai, Alphabet’s CEO, noted that Gemini’s monthly active users climbed 100 million quarter over quarter in Q4 2025, reaching a total of 750 million.

And let’s not forget that Alphabet is one of the dominant players in the advertising world. In the latest quarter, ad revenue grew 13.5% to $82.28 billion. Their revenue streams are diverse and rapidly expanding.

In short, Alphabet’s investments are already yielding strong returns. A substantial investment isn’t as risky as it might seem, particularly for a company of its stature and with access to its vast resources.

Alphabet has the potential to dominate the AI industry. Neither OpenAI nor Anthropic has achieved profitability yet, let alone the financial strength to confidently issue $20 billion in bonds. And, due to its diversified revenue streams, Alphabet is both a bet on AI and a hedge against a potential AI bubble.

If you’re looking to play the AI game, but want to avoid excessive risk, Alphabet is worth considering. Just don’t expect miracles. After all, even the most sophisticated algorithms are still just tools. And tools, ultimately, are wielded by humans. And humans… well, we’re a complicated bunch.

It’s a bit like attempting to catalog all the dreams in the world. Ambitious, certainly. And ultimately, rather pointless.

A charmingly antiquated notion, indeed. Like a digital butler, but without the charm.

A digital empire built on the backs of search queries and targeted advertising. A rather unsettling thought, isn’t it?

2026-02-15 23:13

The Old Guard (and Their Shiny New Golems)

Richer Than Midas (and Just as Prone to Turning Things to Gold)

Century Bonds (and the Art of Extremely Long-Term Thinking)

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