Euro Firms Fund AI with Bonds and Cash Over Bank Loans

Companies across the euro area are increasingly turning to artificial intelligence (AI), but they are financing these investments through internal funds and bond markets rather than traditional bank loans. According to a new analysis by the European Central Bank (ECB), firms in the region are relying more on debt securities and retained earnings to fund AI projects, reducing their sensitivity to interest rate changes.

The findings come from the ECB’s Survey on the Access to Finance of Enterprises (SAFE), which highlighted that around 70% of euro area firms use AI in some form as of 2026. However, only 7% describe their usage as significant or intensive. Planned AI investments are expected to make up about 9-10% of total firm investment for 2026, with technologies and tools accounting for 49% of AI investment budgets and employee training taking up 46%.

Approximately 72% of firms planning AI investments intend to pay for them with internal funds, avoiding loans or outside investors. High AI-active firms have seen a 13% rise in debt securities issuance as of January 2026, while their reliance on traditional bank loans has started to decline. AI-related borrowing made up about a quarter of credit growth to firms in the first quarter of 2026, according to the ECB research.

The ECB notes that this shift towards market-based financing could weaken the monetary policy transmission channel for AI-related spending, as firms become less sensitive to interest rate changes. For bond investors, the rise in debt securities issuance signals a new source of corporate supply tied to technology spending. However, investors will need to assess the balance between tangible hardware investments and harder-to-value intangible assets. Banks may face a mild warning, as the most aggressive AI spenders are moving away from loans.