Goldman Sachs Warns Hyperscalers May Flood Market with New Debt

Goldman Sachs Asset Management is taking a cautious approach to hyperscalers amid a surge in debt issuance, according to its head of multi-sector fixed income investing, Lindsay Rosner. The bank's underweight position on these companies reflects its expectations for heavy supply, rather than a lack of faith in artificial intelligence.

Rosner explained that the market is witnessing a flood of new issuance replacing existing bonds, with major hyperscalers such as Alphabet, Meta Platforms, Amazon, Microsoft, and Oracle increasingly relying on debt to fund their capital expenditure surge. This shift has led Rosner's team to believe 'in the story of AI', but they are also aware that more borrowing could reprice the market.

The growing reliance on debt is a concern for investors, as it may lead to financial risks being transferred from Big Tech balance sheets into less-transparent financing structures. The Brookings Institution estimates that the AI infrastructure boom will require $10.3 trillion of U.S. investment through 2032.