Tech Giants Ramp Up AI Infrastructure Investments, Fueling Record Global Debt Issuance

Historically, major tech companies relied on internal cash flows, but with low global borrowing costs and strong investor demand, these corporations are increasingly turning to debt financing.

As the global AI arms race intensifies, even cash-rich tech giants are resorting to massive borrowing to fund related investments, driving global debt issuance to a record high this year. According to the latest Dealogic data, as of the first week of December, global tech companies have issued bonds totaling $428.3 billion—an unprecedented scale. U.S. firms accounted for $341.8 billion, while European and Asian tech companies issued $49.1 billion and $33 billion, respectively.

Accelerating technological advancements are also forcing companies to continuously invest in new technologies. Meanwhile, S&P Global reports that global data center investments reached nearly $61 billion by the end of November, surpassing last year's $60.8 billion and setting another historic record.

Data from S&P Global shows that data center-related debt issuance has surged to $182 billion this year, nearly double the $92 billion issued in 2023. U.S. tech giants like Meta Platforms, Inc., Alphabet, and Amazon have been particularly active. Meta Platforms, Inc. has raised $62 billion in debt since 2022, with nearly half issued this year, while Alphabet and Amazon issued $29 billion and $15 billion, respectively.

Last month, Alphabet planned to issue at least €3 billion in bonds to finance AI expansion—its second euro-denominated bond offering this year—to support record capital expenditures in AI and cloud infrastructure. On December 19, a data center developer linked to Alphabet was preparing to issue $1.28 billion in five-year junk bonds with an estimated yield of 7.25% to partially fund projects.

However, the surge in bond issuance is raising leverage and weakening debt-servicing capabilities, sparking concerns about corporate balance sheets if AI investments fail to deliver expected returns. Last month, Oracle’s debt metrics triggered a market sell-off. A Morgan Stanley report noted that Oracle’s debt risk indicators hit a three-year high in November, warning that unless the database giant alleviates investor concerns over massive AI spending, conditions could worsen by 2026.

Oracle’s shares have fallen about 40% over the past three months. As markets worry about its aggressive borrowing for AI projects, banks and investors have heavily hedged, pushing its five-year credit default swap (CDS) prices toward levels last seen in 2008. ICE Data Services reported on November 26 that Oracle’s five-year default insurance costs rose to 1.25 percentage points annually—more than tripling in recent months.

Scott Bickley, a researcher at Info-Tech Research Group, commented, "This reflects market overheating. For hyperscale data centers, this model is neither sustainable nor infinitely replicable."