Big Tech’s AI-Driven Debt Spree Raises Alarms — Could Credit Markets Be Overwhelmed?

Tech giants are borrowing at a pace not seen before — and not just to fund operations, but to fuel a massive investment blitz in artificial intelligence (AI) infrastructure. Analysts now warn that this surge in debt could swamp global credit markets and strain investors.

What’s Fueling the Big-Tech Borrowing Spree

• Major companies like Alphabet, Meta, Microsoft, Oracle, and Amazon have collectively raised over $100 billion in bonds in 2025, aiming to bankroll data center expansion to support their AI ambitions.
• Analysts at Morgan Stanley estimate that by 2028, Big Tech could issue up to $1.5 trillion in debt just to fund AI and data center growth.
• This debt wave is not just in U.S. markets: European bond buyers, who have historically had less exposure to tech, are now being tapped to absorb some of the issuance.

Why This Matters – Risks for Credit Markets

1. Supply Overload: Credit strategists warn of “supply indigestion” — too many bonds being issued could overwhelm demand.
2. Widening Credit Spreads: As this debt pile-up continues, investors may start demanding higher yields (risk premiums), especially from these heavy AI borrowers.
3. Leverage Risks: Many of these companies are shifting from using cash on hand to relying heavily on debt — a structural change that introduces new leverage risk.
4. Macro Risk: According to Goldman Sachs, continued reliance on debt to fund AI could amplify macro-level credit risk, especially if the returns from these investments don’t justify their costs.

Where Concern Is Most Acute

• Oracle is under the scanner. Its aggressive borrowing — including a $18B bond sale — to fund data centers and cloud infrastructure has raised red flags, and credit-default swap (CDS) rates for the company are rising.
• Smaller tech players and SPVs (special purpose vehicles) are also being created to raise financing, raising questions about transparency and risk transfer in the debt market.

What Analysts Are Saying

• Some bond investors warn that Big Tech’s non-sensitivity to bond pricing — given the strategic importance of AI — could force the rest of the corporate debt market to reprice as well.
• Others argue that despite the borrowing, Big Tech’s cash flows remain strong — meaning the risk may be elevated but not yet unmanageable.
• Still, the scale and speed of this debt boom are reshaping credit markets: what was traditionally a low-risk, stable sector is now showing signs of strain.

Big Tech’s aggressive debt-fueled AI build-out marks a turning point in corporate finance. While the strategy could pay off in transforming their business models, it also introduces a major risk to the bond market. Lenders and investors are now forced to weigh not just the potential of AI — but the credit risk that comes with it.