Alphabet Receives Strong Credit Ratings as Moody’s Assigns Aa2 to New Debt Offering
Moody’s Ratings assigned an Aa2 credit rating to Alphabet Inc.’s proposed yen-denominated senior unsecured notes on Friday, reinforcing confidence in the company’s financial strength and long-term stability.
According to Moody’s, proceeds from the new debt issuance will be used for general corporate purposes, including the potential repayment of existing debt obligations. The agency maintained a stable outlook on Alphabet.
S&P Global Also Confirms Strong Credit Profile
S&P Global Ratings issued an AA+ rating for the same debt offering, further highlighting Alphabet’s solid balance sheet and financial position.
As of March 31, 2026, Alphabet held approximately $144 billion in cash and marketable securities, adjusted to include recent note issuances in Europe and Canada. During the same period, the company reported a total debt-to-EBITDA ratio of around 0.7x, indicating relatively low leverage levels.
Moody’s Expects Continued Revenue Growth for Alphabet
Moody’s forecasts Alphabet’s total revenue to expand by roughly 15% in both 2026 and 2027, supported primarily by growth in its core businesses.
Google Advertising remained Alphabet’s largest revenue driver, accounting for nearly 74% of total revenue in 2025, while Google Cloud contributed approximately 15%.
The ratings agency expects ongoing growth across both segments despite increasing investment requirements.
Rising AI and Infrastructure Spending May Pressure Cash Flow
While revenue growth remains strong, Moody’s warned that heavy capital expenditures could weigh on free cash flow generation.
The agency projects Alphabet’s capital spending could reach around:
- $185 billion in 2026
- $210 billion in 2027
These elevated investments are expected to pressure free cash flow toward near break-even levels.
Alphabet Reports Strong Q1 2026 Performance
Alphabet posted 22% revenue growth in the first quarter of 2026, reflecting continued momentum across key business segments.
During the quarter:
- Search revenue increased 19%
- Cloud revenue surged 63%
The company also raised its 2026 capital expenditure guidance to $180–$190 billion, up from a previous estimate of $175–$185 billion.
The revised outlook includes spending associated with Alphabet’s acquisition of Intersect, finalized in March 2026.
For comparison, Alphabet spent approximately $91.5 billion on capital expenditures during 2025, highlighting the scale of its expanding AI and infrastructure investments.
Alphabet Maintains Low Leverage Despite Heavy Investment
S&P Global Ratings expects Alphabet’s adjusted leverage ratio to remain low, forecasting:
- 0.2x leverage by the end of 2026
- 0.3x leverage by 2027
Meanwhile, demand for cloud services continues accelerating. Alphabet’s cloud backlog nearly doubled quarter-over-quarter, surpassing $460 billion as of March 31, 2026.
The company also reported $11.7 billion in credit facilities expiring through April 2030, with only $1.2 billion currently outstanding and no borrowings under its $25 billion commercial paper program.
These figures suggest Alphabet retains substantial financial flexibility despite increasing investment in AI, cloud computing, and infrastructure expansion.
