If you mean that taking out any kind of debt is fundamentally a bet that whatever is being put up as collateral will grow faster than the interest rate? Because if it doesn't the risk that suddenly debt holders control you grows by a lot. Yes, absolutely.
So, applied to GOOG, Alphabet Management is betting they will grow more than 4.5% per year at least until 2030.
There is also some weirdness, like Alphabet making a 500 million USD bet short term USD interest rates will be lower than 4% over the 2025-2028 period.
Also, if you have expectations that future inflation may be high, the leverage of borrowing can make sense as a hedge against your cash equivalent holdings in that scenario.
How do these AI companies turn profitable on a short enough timescale for that to make sense? Suppose a step change AI model comes out tomorrow with good enough reasoning to basically replace an employee. Businesses need to retool workflows and processes to accommodate, even if it's better. This is years away, not months. There's not enough market for the compute. And that all assumes science fiction level results, which there is absolutely no indication they will achieve.
But money has not been cheap for a while now so this is interesting. And yes, if you can do something more profitable with it, borrowing is always smart no, regardless of how cheap it is?
The current tech frontier requires capital expenditures on a scale they've been systematically avoiding for 25 years because pure software was easy money. The interesting thing is how they're all trading paper amongst themselves with made up valuations and what blows up when the music stops.
Literally doesnt matter. The baseline for tech is the zirp era of 2010s. Over time borrowing costs and rates have gone up. The ecosystem was very different pre zirp era and comparing is kind of pointless.
If there’s any financial risk then it may not be worth the potential loss of control.