Tech giants like Amazon and Alphabet have raised $60 billion in global bonds to fuel massive AI infrastructure spending. This surge in debt highlights the extreme costs of building data centers, forcing investors to weigh the long-term profitability of AI projects against the risks of mounting corporate borrowing.
What Happened
Major technology companies, including Amazon and Alphabet, are borrowing massive amounts of money to build the digital infrastructure needed for artificial intelligence. Over the last year, these companies have collectively raised approximately $60 billion through bond sales across various currencies, including the euro, yen, and sterling. This is a direct result of the enormous costs associated with setting up data centers and cloud computing systems required to power modern AI tools. Some of these deals have even broken records, with Amazon issuing a multibillion-euro offering that stands as one of the largest corporate bond deals in history.
Why Tech Giants Are Borrowing
The spending on AI infrastructure is growing at a rate that exceeds the cash these companies generate from their daily business operations. Recent estimates project that total capital spending for these hyperscalers could reach $725 billion this year, a nearly twofold increase from mid-2025 projections. When a company spends more on building and expansion than it brings in from net profit, it must turn to external funding. This explains why tech giants are tapping global debt markets on such a massive scale, even issuing bonds with very long maturity periods to lock in funding for their long-term AI projects.
New Ways To Raise Money
Because the need for cash is so high, financial institutions are developing new ways to structure these loans. One notable trend is "lease-backed" debt. In this structure, debt offerings are secured by future income from data center leases. For instance, if a company leases a data center to a giant like Amazon, the future rent payments provide a predictable source of cash. This gives bond investors more certainty about how the loan will be repaid. These types of deals have become increasingly popular, with multiple issuances attracting strong interest from high-yield investors.
The Risks For Investors
The most important question for the market is whether these massive investments will eventually generate enough profit to pay off the debt. Currently, AI-related debt represents about 15% of the total US investment-grade bond market. While investor appetite for these high-quality bonds remains strong, some market participants are concerned about the sheer volume of debt. If the revenue from AI services does not grow fast enough to cover the interest payments, these companies could face financial pressure. Investors are watching to see if the AI boom creates enough real value to justify this mountain of borrowing.
What Investors Should Track
For those observing global technology and bond markets, the key monitorable is the sustainability of this spending cycle. If tech giants continue to borrow heavily to fund projects that take years to become profitable, the cost of debt could eventually become a burden. Furthermore, any sign of slowing demand for cloud services or AI features could force companies to reduce data center expansion. This would not only impact the giants themselves but also the broader tech ecosystem, including global IT service providers and hardware manufacturers that rely on these infrastructure projects.