AI borrowing binge rattles US markets
- Since January, tech giants including Google, Meta, Amazon, and Microsoft have borrowed around $500 billion to finance AI infrastructure, marking an unprecedented shift in how the world's richest companies fund their expansion.
- Chris Della Fave, senior vice-president at fundraising advisory firm Post Oak Group, estimates that AI now accounts for 25% of all corporate bond issuance, up from 4% two years ago. "This is not something that we've seen before," Della Fave said.
- Investors are choosing corporate bonds over US Treasury debt, pushing Washington's borrowing costs above 5.3%, said Mark Malek, chief investment officer at Siebert Financial. That shift reflects how AI debt is crowding out demand for government bonds.
- Warning lights are flashing for Larry Ellison's Oracle, which holds $125 billion in debt with shrinking cash reserves and a possible project delay in New Mexico. Malek cautioned the trouble "could trigger contagion" across AI finance.
- In late September, the Bank of England's Financial Policy Committee warned that "the risk of a sharper correction persists," particularly if concerns about AI adoption hit earnings expectations. The warning signals broader fragility in markets fueled by the debt boom.
32 Articles
32 Articles
Almost nothing in 2024 and about $500 billion in nine months since January: the technology sector is issuing full-time debt
Large artificial intelligence actors borrow hundreds of billions of dollars
The sector's giants had virtually no debt in 2024; today it amounts to more than 500 billion.
With US Treasury bonds at 10 years in maximum 24 years, the pressure on U.S. corporate debt is high and pushes financing costs to unseen levels over several years. Analysts warn of extended risks to the system.
Record high borrowing costs roil US economy
US Treasurys rebounded slightly after yields hit a near-quarter-century high, amid growing signs that increased borrowing costs are damaging the American economy. Yields across much of the G7 have surged in recent months as investors fret over stubbornly high inflation and unrelenting borrowing, with economists voicing particular worry over a potential European debt crisis. The US, however, faces its own challenges: Several major commercial real…
AI's layings began to borrow heavily. After $500 billion since last January, Goldman Sachs is planning a new rise in the regime in 2027, to reach $1,200 billion.
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