Major technology companies, including Meta Platforms, Nvidia, and Amazon, have collectively issued a record $182 billion in investment-grade bonds so far in 2026 to fund their aggressive artificial intelligence (AI) infrastructure buildout. This represents a 1,300% year-over-year surge and accounts for approximately 15% of total U.S. corporate bond issuance this year. This significant borrowing has prompted caution among fixed-income investors, leading to a sharp recalibration of risk in the debt markets. Companies across the industry, including Amazon, Alphabet, Nvidia, Meta, Oracle, and Space Exploration Technologies Corp. are contributing to this capital expenditure push.
The increased borrowing by these "hyperscalers" has caused 5-year credit default swap (CDS) spreads on Oracle, Amazon, Google, and Microsoft to reach around 75 basis points, near their highest in at least seven years. Even excluding Oracle, CDS spreads for this group are up to about 49 basis points, the highest since at least 2018. Both these metrics have more than doubled since the beginning of 2025. Investors are demanding more protection against Big Tech credit risk, recognizing that the AI revolution is reshaping credit markets and causing companies to prioritize compute infrastructure over pristine balance sheets.
Investor appetite for AI-related debt is rapidly waning, as evidenced by a decrease in cover ratios for hyperscaler bonds from 5x in February to just 2x in July, according to Apollo Global Management. This suggests that these companies will face higher interest rates on future bond issuances. Morgan Stanley estimates that AI-related global debt issuance reached $236 billion as of May 31, four times the amount from a year prior, and is projected to grow to $570 billion by the end of 2026. The bond market appears more skeptical than the stock market about the potential returns on AI investments.
The concentration of debt from a few dominant technology companies, such as Apple, Microsoft, and Alphabet, is creating a "big tech problem" within bond market indices. This concentration can lead to increased volatility and make true diversification challenging for investors. Amazon's recent $25 billion bond issuance, for instance, caused its existing 30-year bond to widen by 20 basis points as investors demanded concessions for the new supply. Since September, hyperscalers like Microsoft, Meta, Google, Oracle, Amazon, and Nvidia have more than doubled their collective U.S. dollar debt footprint to over $360 billion, driven by declining organic free cash flow and the accelerated AI buildout.
