AI Financing Sector Stunned by Rate Hike as Debt Reaches $320 Billion

The Federal Reserve's decision to raise interest rates has sent shockwaves through the AI financing sector, which is reeling under $320 billion in debt.

AI infrastructure firms had been borrowing aggressively since late 2025 to fund massive data center buildouts and GPU purchases, as their capital expenditures outpaced operating cash flows.

Total AI-related debt issuance for 2026 is projected to reach between $490 billion and $570 billion, surpassing the entire US high-yield bond market's annual issuance of around $300 billion in a busy year.

Fed Governor Lisa Cook has expressed unease about the financial risks tied to sustained growth in AI-related debt issuance, drawing parallels with the late 1990s telecom and dot-com buildout.