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Investors are growing increasingly uneasy as U.S. tech giants ramp up debt issuance to fund their surging AI bets. Since September, four major “hyperscalers”—Alphabet, Meta, Oracle and Amazon—have collectively issued nearly $90 billion in bonds, a steep jump from their historical pace.
This shift toward public debt marks a change in strategy: instead of relying primarily on cash flow, these companies are leaning on the bond market to finance expansive AI infrastructure, especially data centers. While leverage remains relatively light for now, the flood of new debt has raised questions about the bond market’s capacity to absorb such supply.
Investor caution is growing, in part because the swift acceleration in AI-driven capital expenditures may not immediately produce proportional profits. AI capex is projected to climb to $600 billion by 2027, per Sage Advisory, while net debt issuance could hit $100 billion by 2026.
Investors are growing uneasy that the rapid rise in public debt used to bankroll AI investments could strain the U.S. corporate bond market and eventually dampen the appeal of tech stocks, despite leverage across most major companies remaining low for now.
- Nasdaq's AI rally mirrors early dot-com bubble stages, lacks runaway optimism
NEW YORK, Nov 21 (Reuters) - The biggest bout of volatility in U.S. stocks in months has revealed cracks in the artificial intelligence-related rally, raising questions about whether the market has been in the grips of a speculative bubble that may be popping.
The biggest bout of volatility in U.S. stocks in months has revealed cracks in the artificial intelligence-related rally, raising questions about whether the market has been in the grips of a speculative bubble that may be popping.
www.reuters.com
