Alphabet Issues First Australian Dollar Bonds as AI Spending Grows; Nike Shares Keep Falling

We aim to cover corporate issues and stock-related developments in detail, reporting slightly ahead of domestic press releases. Let's meet the first stock of today's Ticker Talk.

The first stock is Alphabet. As enthusiasm for AI investment continues, Big Tech companies are raising capital even by issuing corporate bonds. Some voices say Big Tech's bond issuance is eating into demand for U.S. Treasuries and pushing up long-term government bond yields. Amid this, Alphabet has reportedly begun soliciting investors for its first Australian dollar bond issuance.

Let's look at the details with a Bloomberg article. The Bloomberg headline reads "Alphabet kicks off bond sale as AI spending surges." Alphabet's first Australian dollar bond issuance was triggered by a sharp surge in AI spending.

The fact that AI spending is surging and that enthusiasm for AI investment has not cooled is being reflected in the earnings of related companies. Big Tech's zeal for AI investment, pouring in astronomical sums, shows no sign of fading, and this year alone Big Tech's bond issuance has reached several tens of billions of dollars.

Among them, Alphabet has raised its capex forecast for this year to as much as $205 billion. Given how much money it is pouring in, free cash flow is bound to turn negative. To make up for the resulting cash shortfall, the company has now turned its eyes to Australian dollar bonds.

The target amount for this Australian dollar bond is 5 billion Australian dollars, roughly 3.6 trillion won, issued in four tranches with maturities of up to 20 years.

The Australian dollar bond market is currently enjoying a record boom in so-called kangaroo bonds. Issuance by overseas companies is growing at a record pace, and domestic and international investor demand is strong, which is considered an optimal time to issue even large or long-dated bonds with ease.

Alphabet's share price, which keeps expanding its AI investment, opened down 0.42%, trading at $342.56.

Next up is Nike. It doesn't seem easy to find Nike stores the way it once was. Against this backdrop, Wall Street still largely holds a buy rating on Nike. Let's look at the details through a Yahoo Finance article.

The Yahoo Finance headline reads "Nike stock plant is relentless," meaning Nike's share price decline is unending. Wall Street still offers positive views on Nike, yet the stock keeps falling. Fourth-quarter revenue, announced at the end of June, came in at $11 billion, down 4% from a year earlier, and earnings per share (EPS) were $0.72.

Looking only at the numbers, one might think things improved from last year, but there is a catch. A large portion of the profit was a one-time gain that included a tariff refund, and excluding it, Nike's true earnings were actually weak. On top of that, the outlook is bleak.

Nike itself has said that EPS growth will be effectively flat for the next three quarters. Nike's slogan is 'Just Do It,' and Yahoo Finance's executive editor Brian Sozzi has been mocking the company by playing on that slogan.

Brian Sozzi pointed out that what Nike is now doing is 'Just Doing'—continuing to deliver weak earnings and a gloomy outlook. An analyst at Evercore ISI also gave a cold assessment, saying there are no signs revenue will rebound in the near future.

Even sponsored athlete LeBron James said, "You got to get back into the roots," meaning the company needs to return to its origins and communicate directly with consumers on the ground, as it did in the past.

Looking at today's price movement, Nike is trading in modest positive territory, slightly up, at $39.34. That concludes today's look at the issues surrounding Alphabet and Nike.