DoubleLine portfolio manager Robert Cohen indicated that bonds from major technology companies, specifically Amazon and Alphabet, are now presenting value following a recent selloff in the AI debt market. Cohen, who previously warned of a "100% bubble risk" in AI-related bonds, suggests that the market has become excessively optimistic. However, the recent widening of tech corporate bond spreads—now at 89 basis points, 9 basis points wider than the overall investment-grade market—has created opportunities for selective investment in high-quality deals.
Cohen's shift in perspective comes after a period where tech bonds saw significant selloffs, driven by concerns about the sheer volume of debt issuance to fund the artificial intelligence boom and rising inflation. Analysts noted that Amazon's recent long-dated $25 billion bond sale, for instance, priced at approximately 120 basis points over Treasuries, a spread roughly double what it would have been last year. This increase in required yield, reflecting higher perceived risk, has pushed tech spreads from trading tighter than the market to wider.
Despite the broader market's "indigestion" regarding the wave of AI debt, with AI hyperscalers' debt issuance reaching $220 billion in 2026—a substantial increase from $12.5 billion in the comparable period last year—Cohen implies that the higher yields on strong companies like Amazon and Alphabet make them more appealing. He maintains that while the overall AI bond market may be prone to a bubble, well-capitalized tech giants still offer sound investments, provided the pricing is right. DoubleLine had previously avoided AI-related bonds due to tight spreads but is now open to participation in quality deals.
