Big Tech Is Now Big on Debt and That Changes Everything
The binge puts in doubt the asset-light business model that has garnered rich valuations for US stocks.
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Alphabet’s latest bond spree is testament to how debt has become the Achilles heel of investment in artificial intelligence. The spending threatens to transform how investors view technology companies and US stocks more broadly.
Big Tech companies are cash-flow machines that dominate the list of most valuable publicly-traded companies. This helps the technology industry get billed as light on capital needs with so much operating leverage that revenue from new customers mostly falls to the bottom line as profit, fattening margins and rewarding shareholders.