Big Tech AI debt hits $350bn as investors cool on long-dated bonds amid infrastructure spending spree

Investors sell longer-dated AI debt amid Big Tech borrowing spree

Investors are selling out of long-dated AI debt, amid growing fatigue over Big Tech firms' huge borrowing spree and concerns over whether the multitrillion dollars of infrastructure investment it is funding will ever pay off. Prices of AI-linked bonds with maturities of 10 years or more have fallen this week, making them some of the worst performers in the investment-grade market, according to MarketAxess data. The yield on a 30-year SpaceX bond has risen to 7.3 per cent, up from 6.7 per cent when it was sold less than two weeks ago. Bonds issued by the top five hyperscalers -- Amazon, Google, Meta, Microsoft and Oracle -- are now yielding roughly 0.6 percentage points more than their blue-chip peers with the same ratings and maturities, representing the widest risk premium of any sector in the investment-grade market, according to BofA Global Research. While the short-term borrowing costs for so-called hyperscalers building vast AI infrastructure remain steady, investors have been demanding more yield to compensate for the risk of holding debt with longer tenors. They point to risks that AI's eventual profitability may not match current lofty expectations, while future innovation in the fast-moving sector could render this investment obsolete. "We prefer taking more near-term risks," said Mariya Entina, portfolio manager at fund firm DoubleLine. "Typically when you buy 30-year bonds you want businesses that have a really solid outlook, such as clear returns on investments. There's scepticism over the longer-term profitability of AI capital expenditure." Pramod Atluri, a portfolio manager at Capital Group, also favours short-dated hyperscaler bonds. "The technology is evolving so rapidly, which makes it a riskier proposition to lend for a long period of time," said Atluri. "It's not clear what the industry landscape is going to look like ten years from now." The latest sell-off follows a glut of record-breaking issuance by tech companies to fund the AI arms race. Supply of AI-related high-grade bonds has reached $270bn across currencies this year, almost double the amount for the whole of last year, according to BofA Global Research. Amazon, which sold $25bn of bonds on Tuesday, saw weaker demand for the longer end of the deal. Its five-year bonds attracted about 20 per cent more orders than the 30-year portion, according to bankers and investors. The 30-year bond was yielding more than 6.1 per cent on Friday, compared with a 4.8 per cent yield on the five-year debt. The overall order book was just over $60bn, marking a big decline compared with Amazon's last trip to the capital market in March, when it secured more than $120bn of orders, the people said. So far the tech firm has raised nearly $90bn across different currencies. Investors needed to offload existing hyperscaler debt to make room for Amazon's new offering, given that many portfolios were already heavily exposed to AI debt, said John Lloyd, global head of multisector credit at Janus Henderson. "You're taking obsolescence and technological disruption risks over time," Lloyd said. "For us to play a new deal, it has got to come with a pretty big concession to entice us." Recent volatility in tech stocks has also damped sentiment, he added. In addition, some investors already have large exposure to the tech sector in their equity portfolios, which may temper their appetite for further exposure in the debt market, according to Amanda Lynam, chief credit strategist at Goldman Sachs Research. DoubleLine's Entina added that, as long-dated debts are often purchased by insurance and pension funds that need to match their long-term liabilities, they are often more conservative. The attraction of long-term AI debt is also lessened by the elevated short-term yields on US Treasuries, due to above-target inflation and expectations that the Federal Reserve's policy rate will stay higher for longer, particularly following Kevin Warsh's hawkish tone at his first meeting as the central bank's new chair last month. "Why would you add more risks if you have been able to secure attractive yields without extending too far in the curve?" said a credit analyst focused on high-grade credit. Data visualisation by Ray Douglas

Big Tech's AI debt hits $350bn and heads to Europe

Alphabet, Amazon, Meta, Microsoft and Oracle have doubled their debt to $350bn to build AI, and cash flow is not keeping up. Now they are crowding into European credit markets, on track to out-borrow France. Big Tech built its reputation on mountains of cash. It is building its AI empire on debt, and the bill is starting to land in Europe. The five biggest builders of AI data centres in the US have doubled their debt over five years. Together, Alphabet, Amazon, Meta, Microsoft and Oracle have piled on about $350bn, according to data compiled by Bloomberg. They are betting that cutting-edge AI will one day pay it all back. For now, the interest is almost a rounding error. The five paid a combined $10bn on their debt last year. That is more than double 2019, but tiny beside Google's cash flow of roughly $64bn last quarter. These are still some of the most profitable firms on Earth. The strain shows at the edges. Amazon's free cash flow turned negative in the March quarter. Oracle's debt reached about 2.5 times its sales, and S&P cut its rating on Thursday to one notch above junk, blaming AI spending. The market is starting to flinch Investors have lapped up the bonds so far. That may be changing. Amazon's $25bn sale this week drew a notably cool reception, the softest hyperscaler launch since Meta's last October. Traders are now dumping older tech bonds, including Amazon's, Nvidia's and Oracle's, simply to make room for the new flood. The buyers are running out of space, not confidence. Still, the warning signs are stacking up. "Credit risk is too undervalued right now in the market," Morgan Stanley's Vishal Khanduja told Bloomberg TV. Why this reaches Europe Here is the part that should matter on this side of the Atlantic. American tech has run short of dollars to borrow, so it has turned to Europe. Hyperscalers issued no non-dollar bonds in 2024. By 2026 it is a core part of their funding. Morgan Stanley expects their euro borrowing to reach €50bn this year, as TechFundingNews reports. That would make US Big Tech the single largest source of corporate debt in the eurozone, ahead of France. Alphabet alone has borrowed in yen, Canadian dollars, Swiss francs and sterling inside a year, and even sold a 100-year bond. When American giants crowd into the same euro debt that European scale-ups and infrastructure funds rely on, the cost of money shifts here too. A startup in Munich or Paris with no AI exposure at all can end up paying more, simply because Amazon got there first. The Intel warning Not everyone is worried. Amazon boss Andy Jassy says he has "high confidence this will be monetized." Mark Zuckerberg insists demand for computing power keeps outstripping supply. Gil Luria of DA Davidson agrees the load looks manageable: "If they were borrowing an order of magnitude more? That would look bad." Others are blunter. "It seems like a lot of demand hype that is very aspirational at this point," said Fitch's Jason Pompeii. The cautionary tale sits one industry over. Intel spent years loading up on debt, missed the AI chip boom entirely, and needed a US government bailout and an Nvidia investment to survive. Why it matters The AI build-out has quietly become one of the largest debt bets in corporate history, and one research shop thinks the AI debt market could reach $7tn by 2029. Only Alphabet's stock has beaten the market this year, while Microsoft and Oracle have both fallen more than 20%. The share buybacks that once defined these companies have all but stopped. The gamble is no longer just whether AI works. It is whether the revenue arrives before the debt does, echoing the bubble warnings and eye-watering valuations already circling the sector. It is the same wager driving Nvidia's bond sales and ByteDance's borrowing. Europe just became a place where that wager gets settled.

Amazon returns to the bond market for at least $25bn to fund its AI build-out

The eight-part sale is Amazon's biggest of the year, and the company has told bankers it does not plan to borrow again in 2026. Amazon has gone back to the debt markets for at least $25bn, its largest bond sale of the year and the clearest sign yet of how much the company is prepared to borrow to keep pace in the artificial intelligence race. The offering is split across eight tranches with maturities running from 2029 out to 2066. The money is earmarked for the thing swallowing cash across the whole industry: data centres, custom silicon, and the physical scaffolding that AI now demands. It follows a pattern set by Amazon's record Canadian dollar bond earlier in the year, part of a borrowing run that has now topped $70bn since the start of 2025 across dollar, euro and Swiss franc deals. Much of that spending flows through Amazon Web Services, where the company is racing to add capacity for customers training and running large models. A growing share is also going into its own Trainium chips, which Amazon has pitched as a cheaper alternative to buying Nvidia hardware at scale. Investor demand was there, though it cooled as the terms firmed up. Orders peaked at around $62bn before the banks managing the sale trimmed the spread on offer, leaving the final book at roughly $41bn, or about 1.6 times the size of the deal. Amazon told the underwriters it does not plan to issue any more debt this year, a detail that reads as reassurance to a market watching the sector stack on leverage. It is the kind of guidance that matters when investors are trying to gauge how much more paper is coming. The borrowing has an obvious cause on the balance sheet. Amazon has guided to roughly $200bn in capital spending for 2026, the most of any hyperscaler, and that bill has already compressed its free cash flow to a fraction of what it was a year earlier. The company is far from alone in reaching for debt to plug the gap. The four largest US tech firms have collectively guided to more than $650bn in AI capex this year, a figure that increasingly outstrips what even their vast operating cash flows can cover. Not everyone reads the appetite as bottomless. Analysts noted that demand for this sale looked muted next to some earlier offerings, a hint that bond buyers are turning choosier as AI-linked debt floods the market. That caution is showing up elsewhere in the financing chain. Deals such as Cipher's junk bonds, raised to build an Amazon data centre in Texas, are testing how far investors will stretch to fund the boom at the riskier end. Amazon structured the offering as a mix of fixed and floating-rate notes, giving it flexibility across a curve that reaches four decades out. The longest tranche, due in 2066, is the sort of ultra-long paper usually reserved for the most creditworthy names. Amazon can still borrow at those terms because it remains one of the highest-rated corporate issuers in the market, which keeps its funding costs low even as the totals climb. That gap between what Amazon pays and what smaller rivals pay is now part of the story of who can afford to keep building. The sale also lands in a market already thick with AI-linked paper from Meta, Oracle and a string of data-centre developers. Each new deal tests the same question, which is how much more debt investors will absorb before they start demanding a higher price for it. For now the sale hands Amazon a fresh cushion as it heads into a stretch of heavy spending with no let-up in sight. Whether the market stays this willing on the next trip is the question now hanging over the entire sector.

Amazon's $25 billion 'surprise' bond sale dangled extra yield to lure in buyers -- and flashed a warning sign about the AI boom | Fortune

Bond investors haven't been rattled as they've watched AI giants rack up $270 billion in debt this year. But on Tuesday, Amazon gave them a shake. The company plunked what Bank of America called a "surprise" $25 billion bond sale on the market on July 7, bringing the amount of debt issued by the tech giant to $92 billion this year -- surpassing the amounts that Alphabet's Google, Meta, and Oracle have each issued this year. To get the deal done, Amazon had to sweeten the terms, offering 18 to 21 basis points of extra yield on its longest bonds. Yet even with sugar on top, Amazon's debt offering drew the weakest demand with orders at just 2.5 times the bonds on offer, down from 3.2 times in March. According to BofA, Amazon's overall new-issue performance was the weakest for any hyperscaler since Meta's $30 billion bond sale in October 2025 "Investors are pushing back," BofA wrote in its note. "The deal should also inject even more uncertainty into the hyperscaler/AI supply outlook." Amazon still had more buyers of its investment-grade debt (credit agency Moody's rates it AA, its third-highest rating; S&P rates it S1, its fifth highest) than it sold in Tuesday's deal. But the slowing level of demand could be a warning sign about the future of the AI boom. So far this year, bonds related to AI are already almost double the debt value in the sector issued in 2025, which was $136 billion for the full year. Among the AI industry's $270 billion issued, BofA estimates $194 billion is from so-called hyperscalers, the tech giants who build and operate massive data centers to power their online services and rent cloud computing capacity to other businesses. Besides Amazon, the other hyperscalers including Alphabet, Meta, Microsoft, and Oracle have all announced plans for enormous capital expenditures to fund their AI-related ambitions. Alphabet even issued century-long bond when it raised $30 billion earlier this year. Amazon's cash grab will go to fund its rapidly growing cloud computing business, Amazon Web Services (AWS.) At the company's last earnings call in April, CEO Andy Jassy told analysts that the faster Amazon's cloud computing business grows, the more short-term capital expenditures Amazon will have. AWS has to pay cash for "land, power, buildings, chips, servers, and networking gear" in advance before it can profit six months to 2 years down the road, Jassy said during the call. Amazon's capex totaled $43.2 billion in the first quarter alone, chief financial officer Brian Olsavsky said on the same call, and he said it was directed toward both AWS and generative AI. The mega spending is hurting Amazon's cash flows, with its free cash flow over the trailing 12 months down to $1.2 billion, compared to $25.9 billion a year ago. The decline was driven by a year-over-year increase in property and equipment purchases of $59.3 billion, according to Amazon's Q1 2026 figures. However, Amazon still spun up $148.5 billion in operating cash flow, up 30% over last year. But the bond market is clearly taking note. Amazon issued bonds in eight tranches ranging from three to 40 years, according to BofA, and hyperscaler bond spreads expanded between six and 15 basis points that day. Amazon's bond deal even helped lift the 10-year Treasury yield up eight basis points, BofA noted. Wider spreads and slightly weaker demand signals that the AI buildout might be moving slightly faster than the speed at which investors are willing to soak up all this debt. Yet, BofA wrote that the pushback isn't too significant at this point. Heavy spending is mostly expected, and demand is robust. Amazon will next report earnings either later this month or in early August.

Amazon raises $25 billion bond sale for AI infrastructure

Amazon $AMZN filed plans Tuesday for an eight-part bond sale targeting at least $25 billion, as the company continues to fund a large-scale artificial intelligence infrastructure buildout. Bloomberg reported that investor demand may push the final figure higher than the $25 billion minimum. Amazon also told its underwriters it does not plan to issue additional debt this year. A company spokesperson told CNBC that any money raised is earmarked for broad corporate needs, a category that can encompass new investments, capital expenditures down the road, and paying off existing debt. "We regularly evaluate our operating plan and make financing decisions, like issuing bonds, accordingly," the spokesperson said. According to Amazon's SEC filing, the deal's underwriting duties are shared among Barclays, Goldman Sachs $GS, J.P. Morgan, and Morgan Stanley $MS. Maturities on the notes span from three years out to 40 years, Bloomberg reported, with that outlet also being the first to put a dollar figure on the deal, citing people it did not identify by name. The new offering follows a substantial debt-raising push earlier in 2026. Amazon raised roughly $54 billion in bonds in the U.S. and Europe earlier this year and an additional $10 billion in Canada in June. An 11-part offering the company brought to market in March drew so much investor interest it was heavily oversubscribed, ultimately raising $37 billion. This year's capital expenditure budget is set at $200 billion, a sharp increase from the $131 billion Amazon spent in 2025, with data centers, chips, and supporting hardware accounting for the bulk of those outlays. CEO Andy Jassy has pushed back against skeptical investors by framing the AI moment as a "once-in-a-lifetime opportunity" that justifies the scale of spending. The bond sale is part of a broader turn by major technology companies toward debt and equity markets to finance AI spending. Combined AI outlays from Amazon, Alphabet $GOOGL, Microsoft $MSFT, and Meta $META are on track to exceed $700 billion in 2026, according to Reuters. Elsewhere in Big Tech, Meta tapped investment-grade bond markets for $25 billion this year after closing a $30 billion deal last October, and Alphabet separately secured roughly $85 billion by expanding an equity offering last month.

AI data centre boom doubles Big Tech debt to $350 billion in five years

Major AI data center builders have doubled their debt in five years. This borrowing finances an unprecedented spending spree for economic transformation. Investors have backed these companies, buying new bonds issued globally. However, Amazon's recent bond issuance received a chilly reception from buyers. Some companies show balance sheet strain as AI spending accelerates. The largest builders of artificial intelligence data centres have doubled their debt load in the last five years, turning to borrowing to finance an unprecedented spending spree they claim is needed to transform the economy. Alphabet, Amazon. com, Meta Platforms, Microsoft and Oracle, the five biggest spenders on new data centres in the US, collectively added some $350 billion to their debt obligations in the last five years, according to data compiled by Bloomberg. They're betting heavily that cutting-edge AI services will mean a flood of new revenue down the line. Investors have enthusiastically backed the companies, snapping up new bonds issued in a variety of currencies. But buyers gave an unusually chilly reception this week to a $25 billion issuance from Amazon, people familiar with the matter told Bloomberg, a sign that there's a limit to the amount of money available to back investment from the tech giants. The cost of that borrowing is still relatively minor for most of the companies, which have been enormously profitable. Interest expense at the five topped $10 billion last year. That's more than double where it stood in 2019, but it pales in comparison to the free cash flow of just one of them. Google's cash from operations minus capital expenditure was $64 billion at the end of the March quarter. Other companies balance sheets are showing more strain. Amazon's free cash flow went negative in the quarter ending March 31. The cash burn at Oracle, whose debt stood at about 2.5 times its sales in 2025, is expected to accelerate. S&P Global Ratings on Thursday downgraded Oracle to the lowest investment-grade rating, citing the company's growing AI spending. Software companies tend to be high-margin businesses that don't require much regular capital expenditure. For the industry's largest players, that started to change with the advent of cloud computing, which required big investment in server farms. AI data centers, which are usually larger than prior facilities and feature pricier chips, supercharged that outlay.

Amazon aims to raise $25 billion from bond sale, Bloomberg News reports

Amazon plans to raise at least twenty-five billion dollars through a new bond sale. This move aims to fund the company's significant investments in artificial intelligence technology. Other major tech firms are also tapping debt markets for similar costly AI infrastructure build-outs. These companies are expected to spend over seven hundred billion dollars on AI this year. The offering size may increase based on investor demand and market conditions. Amazon. com is looking to raise at least $25 billion through a U.S. dollar bond sale, Bloomberg News reported on Tuesday, in the company's latest push to fund its hefty AI investments. Tech companies have been tapping debt markets and launching equity sales to fund their ⁠costly ⁠AI infrastructure build-out. Big Tech, including Amazon, Alphabet, Microsoft and Meta, are expected to spend more than $700 billion on AI this year. The size of Amazon's offering could increase depending on investor demand, Bloomberg said, citing people familiar with the matter. Amazon did not immediately respond to a ⁠Reuters request for comment. A regulatory filing by the tech giant from earlier in the day showed it ⁠has filed for an eight-part offering of floating and fixed-rate notes. Turning to debt and equity offerings for capital marks a shift for the Silicon Valley giants, who have typically relied on their cash reserves to fund their investments. The recent debt offerings have seen strong investor appetite. Google-parent Alphabet last month said it would raise some $85 billion in an upsized equity sale. Facebook-parent Meta earlier this year sold investment-grade bonds worth $25 billion, ⁠following a $30 billion bond sale in October, which was the company's biggest ever. Amazon said in its exchange filing that Barclays, Goldman Sachs, J.P. Morgan and Morgan Stanley are the joint book-running managers for the offering. The company had in March targeted a $37 billion raise in a heavily oversubscribed 11-part bond sale.

Abishai Financial Asia Tracks Amazon AI Debt Sale

A surprise $25 billion offering from Amazon lifts artificial intelligence borrowing towards $270 billion, yet thinning order books, wider yield concessions and shrinking free cash flow expose how far the cloud giants now lean on the bond market. A $25 billion bond sale from Amazon, characterised by Bank of America as a surprise transaction, lifts the technology group's borrowing to $92 billion over recent months. Across the wider market, artificial intelligence related debt now reaches approximately $270 billion over the same span, nearly double the $136 billion issued across the whole of the previous year. Hyperscaler bonds make up an estimated $194 billion of that total, and Abishai Financial Asia reads the sale as a marker of how sharply the sector's funding needs have shifted. The sale arrives only months after an earlier $37 billion offering, an interval Bank of America regards as unusually compressed. Amazon has signalled to underwriters that it intends no further issuance in the near term. Order books close at 2.5 times the amount offered, down from 3.2 times on that earlier deal and the softest cover for any hyperscaler since a comparable $30 billion sale from Meta late last year. To draw buyers into maturities ranging up to 40 years, the group concedes 18 to 21 basis points above comparable securities. The individual deal sits within a broader repricing of technology credit, one that Morgan Stanley expects to lift annual artificial intelligence related issuance to $570 billion. The firm's Director of Private Equity, Daniel Coventry, describes a sector that has, as he puts it, "moved decisively beyond operating cash flow and into the bond market as a standing source of finance," a shift he believes warrants closer monitoring of aggregate exposure budgets. The five largest hyperscalers have together raised $121 billion in US corporate bonds over the past year, against an annual average of $28 billion across the preceding four years, a rise of 332%. Amazon's reliance on debt reflects an equally rapid rise in spending, with Web Services revenue reaching $35.6 billion in the most recent quarter. That marks a 24% increase on the same period a year earlier. Chief Executive Andy Jassy states publicly that the division faces greater demand than it can currently supply, with chip availability the binding constraint, even as the group directs $43.2 billion towards cloud and generative AI capacity in the opening quarter alone. Committed capital expenditure now stands at $200 billion, while trailing free cash flow has contracted to $1.2 billion from $25.9 billion a year earlier, with capital spending now absorbing 94.5% of operating cash flow. Comparable pressures run across the sector, where Oracle has raised $27.7 billion over the past year and Meta has more recently arranged a $27 billion private credit facility with Blue Owl to fund a data centre campus in Louisiana. Alphabet, meanwhile, has placed the first 100-year bond from a technology issuer in decades. S&P Global warns that credit quality faces erosion should the anticipated recovery in cash flow fail to materialise. With Oracle already carrying a BBB rating on a negative outlook, Coventry observes that "an investment grade label alone is no longer a sufficient guide to the risk embedded in these balance sheets." The strain reflects a widening gap between what the cloud providers earn and what they spend. The five largest are on course to commit some $750 billion to capital expenditure, equivalent to 38% of revenue and set to approach $1 trillion within four years, even as quarterly operating cash flow of $26 billion sits against outlays of $44.2 billion. Rate expectations offer only a partial offset, with global investment grade credit currently yielding around 4.4%. Coventry maintains that "disciplined exposure management, rather than passive reliance on a rating, is the more defensible posture while issuance continues at this pace." Set against secondary markets where roughly $50 trillion of US corporate bonds trades barely $43.5 billion on an average day, the build out leaves institutional investors weighing resilience as closely as return. Hedging through credit default swaps has climbed sharply in recent quarters, even as secondary depth in the newest paper stays thin. Widening yield premiums and thinning cover point to a durable change in how that risk is priced, one that rewards active management of single issuer limits over confidence in a rating alone. Abishai Financial Asia reads the present wave of infrastructure led issuance as a test of capital discipline that is only beginning.