Concerns over AI spending are growing as tech firms flood bond market ​

US tech giants are fueling concerns in the bond market as they substantially increase debt issuance to fund a historic surge in artificial intelligence (AI) investments. Since September, companies like Alphabet , Meta , Oracle , and Amazon have collectively raised nearly $90 billion through public bonds, a major shift from their usual reliance on cash for capital needs.​

Drivers of Bond Market Jitters

• AI-related capital expenditure is set to climb steeply, projected to reach $600 billion by 2027, up from about $200 billion in 2024 and close to $400 billion in 2025.​

• The bond issuance from the four largest US cloud and AI companies has spiked to over $120 billion this year (including a large financing arrangement by Meta), a sharp jump from an average of $28 billion in the prior five years.​

Investor Concerns

• Investors are increasingly worried that such rapid debt accumulation could strain the US corporate bond market and negatively impact technology stock valuations.​

• There is a sentiment that the market might not be able to absorb these giant debt offerings without demanding higher interest premiums: both Alphabet and Meta reportedly paid 10-15 basis points above their existing debt rates for their latest issues.​

• Although these companies still have low leverage compared to their size, the rapid pivot to bond funding is prompting caution about whether AI investments will yield enough profits to justify the levels of borrowing.​

Market Response and Future Outlook

• Bondholders have already experienced as much as 7% losses in some tech debt over a six-week period in late 2025.​

• Forecasts suggest that major tech players exposed to AI could need to issue up to $1.5 trillion in bonds over the next five years, with $300 billion in 2026 alone—an amount said to be more than half of what the US Treasury issues annually.​

• UBS estimates that about 80-90% of AI capex is still funded by internal cash flows, but the share financed with debt is rising and could grow further as infrastructure needs expand.​

These developments underscore deepening worries in financial markets about the sustainability and funding sources behind the AI boom, a trend likely to remain in focus as the scale of tech spending accelerates.​