Tech Giants Fuel AI Ambitions with Record-Breaking Debt Binge

The biggest tech companies are taking on massive amounts of debt to fund their AI projects. Hyperscalers, including Alphabet, Amazon, Meta, Microsoft, and Oracle, have issued a staggering $121 billion in new debt in 2025, but that figure has already been blown past in 2026, with year-to-date issuance exceeding $170 billion. This represents a fivefold increase from the pre-AI annual average of around $35 billion for these companies.

The yield on recent bond deals tells the story - BlackRock sold a $12.5 billion bond in July 2026 carrying a yield of 7.53%. This is not typical investment-grade territory, but rather more commonly associated with junk-rated issuers. Oracle's bonds, rated Baa2/BBB, are trading at spreads that are also seen in the junk market.

The borrowing binge is expected to continue, with global AI-related debt issuance projected to reach approximately $570 billion by the end of 2026, up from around $236 billion just a few months ago. While investor appetite for these bonds may be cooling, new trading products specifically designed for AI-related debt suggest that this market views it as durable.

The implications for the broader credit market are significant - nearly $570 billion in AI-related debt by year-end would represent a meaningful share of total global corporate issuance, potentially crowding out borrowers in other sectors or pushing yields higher across the board.