Tech Giants Flood Euro Bond Market, Raise Credit Risk Concerns

US tech giants are increasingly tapping into the euro zone bond market to fund massive investments in artificial intelligence (AI), potentially crowding out other borrowers and pushing up borrowing costs for governments. According to a European Central Bank blog post, tech firms such as Google, Amazon, and Microsoft could spend as much as $1 trillion on AI-related investments by 2028.

The bond market is already feeling the effects, with Amazon and Alphabet being the largest corporate issuers in the euro zone this year. They have about €40 billion ($46 billion) of bonds outstanding in the euro zone, accounting for nearly 10% of gross new issuance.

Concerns are growing that as these tech giants accumulate debt, they will push up borrowing costs across the market. The blog post warned that U.S. big tech companies could 'push up borrowing costs for all sectors' and even influence sovereign bond markets.