A wave of AI-linked borrowing is rippling through credit markets, as US tech giants tap debt markets to finance massive data-center expansion tied to the AI race.
US companies have issued more than $200 billion in bonds this year to fund AI infrastructure, with deals from Meta, Alphabet and Oracle dominating the flow, reports The Financial Times.
Analysts say the financing boom marks a new phase of the AI cycle — one where debt, not cash reserves, fuels hyperscale buildouts. They warn that the surge could reshape credit markets and stress other sectors as liquidity is being sucked into one emerging industry.
In late October, Meta sold over $25 billion worth of bonds in an offering that saw massive oversubscription as investors piled in orders to the tune of $125 billion.
Meanwhile, Oracle sold $18 billion in bonds in September for a data-center venture that will be used by ChatGPT creator OpenAI. And in April, Alphabet raised $18 billion through a bond offering.
Banks and investment firms have also joined the fray to help fuel the AI infrastructure boom.
Japanese investment titan SoftBank turned to the overseas bond market in an effort to raise $2.9 billion and fund its artificial intelligence partnership with OpenAI. JPMorgan Chase and others led a $38 billion debt sale for Oracle’s massive data center projects in Texas and Wisconsin. The data centers will be used by Oracle to supply compute power to OpenAI’s Stargate project.
Recently, Empower chief investment officer Marta Norton warned that the AI boom is now flashing a red flag as tech giants turn to the credit market for financing.
“But now, in the most recent month, we are beginning to see more debt issuance. When you think about the scale of investment and the ratio of capital to revenue that we’re seeing, even at the hyperscalers, it does argue that we’re going to have to use a broader range of financing to meet some of the targets that we have. And of course, that’s the signal that folks are looking for, that there is an AI bubble.”
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