Big Tech is becoming hooked on debt to fuel its grandiose visions of AI dominance, a slight shift from years past, when aggressive investments were largely driven by internally generated cash.
The news: AI-related companies have issued about $140 billion in investment-grade bonds year to date, accounting for 49% of the total investment-grade issuance, according to new analysis from the Kobeissi Letter.
In high-yield corporate bonds, AI-related companies have accounted for 38% of total issuance, or roughly $21 billion year to date.
The most headline-making debt raise of the year has been out of Alphabet (GOOG, GOOGL).
Alphabet became the first tech company in decades to issue a 100-year bond. In total, Alphabet raised $31.51 billion in February across its global bond offering, tapping sterling and Swiss franc markets alongside US dollar issuance.
“The AI investment boom is reshaping how capital is allocated across the entire financial system,” researchers at the firm said.
The analysis: Google, Amazon (AMZN), Microsoft (MSFT), and Meta (META) collectively plan to allocate $725 billion to capital expenditures in 2026 — up a staggering 77% from last year’s already record-breaking $410 billion.
Amazon is projecting $200 billion in capital expenditures, Alphabet is targeting $175 to $185 billion, Meta is guiding $115 to $135 billion, and Microsoft is tracking toward $190 billion for the calendar year.
The five main hyperscalers have plans to add roughly $2 trillion in AI-related assets to their balance sheets by 2030. That goes a long way toward explaining the need to take on new debt.
AlphaSpace intel: Singling out Meta, the use of debt to fund AI initiatives is apparent. Meta’s total debt has climbed from about $36 billion in 2023 to $84 billion at the end of the first quarter, according to Yahoo Finance AlphaSpace.
Bottom line: Hopefully, for the sake of their investors, the top and bottom lines of these debt-hungry tech companies show massive benefits from AI in the years to come. If not, expect the market to more closely scrutinize their balance sheets.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
