05/28/2026
Stock Market Insights
By Dr. Richard Baker, AIF®
Big Tech’s AI Spending Boom Is Reshaping the Bond Market
We were so nervous! In 1997, my wife and I bought our first house and signed the papers for our $18,800 mortgage. going into debt for the first time. Looking back now, it wasn’t much money, but that debt felt like a huge responsibility. I suspect the tech companies aren’t nearly as nervous about their new debt as we were.
Big tech companies are spending a tremendous amount of cash on building artificial intelligence (AI) infrastructure and data centers, and are beginning to rely on debt to do it.
The four biggest names in tech, Microsoft, Alphabet, Meta (Facebook), and Amazon, all recently reported earnings and mentioned that they are starting to make money with their AI tools. That success, however, is coming at a steep cost. These companies together are spending more than $650 billion this year on building out AI infrastructure. That is almost as much as the inflation-adjusted cost of the Apollo Space Program, the entire US Interstate Highway system, and the 1850s build-out of the US railroads...COMBINED! It is hard to grasp just how much this is, but it is a lot.
These companies are well capitalized. Until recently, they have paid for the massive data centers, graphics processing units (GPUs), and power infrastructure buildouts from their cash reserves and large cash flow. I guess even a cash cow eventually runs out of milk. These mega companies are now turning to the bond market for cash to continue building.
It is an interesting transition to watch the AI boom go from an equity market story to a mass fixed-income story. Specifically, Amazon, Alphabet, Meta, Microsoft, and Oracle are shifting from relying on internal cash flows to issuing significant amounts of bonds (debt) to fund their respective AI infrastructure. The magnitude of their bond issuance is changing the investment-grade bond supply.
The five tech giants issued approximately $121 billion in U.S. corporate bonds in 2025, which was more than four times their $28 billion average from 2020–2024. So far in 2026, analysts are projecting that they will increase their bond issuance by another 30–50% to $130–150 billion. If they do, it will raise the tech sector’s weighting to around 10% of the entire Bloomberg Corporate Bond Index.
The bonds they are issuing are generally long-term (10, 20, or 30-year bonds) since the data centers and other AI infrastructure they are building are expected to have a useful life of multiple decades. The concern is that they might flood the bond market with long-term debt that could affect yields and make bond portfolios more vulnerable if/when rates rise.
From a credit perspective, the story is positive. Compared to the typical company issuing investment-grade bonds, these mega tech companies are strong and have very little debt compared to their earnings, even after this heavy borrowing for their AI projects.
The risk of over-concentration of tech bonds in the bond market is rising, but it’s not out of whack yet. Spreads are still at historically low levels, and total yields are above long-term averages, which means the current environment is positive for bond investors. Still, it needs monitoring to see how it all plays out.
We fixed up that 80-year-old house with the leaning floors and made a $30,000 profit three years later when we sold it. We look back now and see that our wealth began the day we signed that first mortgage. That debt enabled us to scale up and start building assets. I have no doubt these bonds will do the same for big tech companies, but I will also be watching to ensure they don’t get a little overzealous and upset the all-important bond market along the way.
Have a blessed week.
www.FerventWM.com
This article was written by humans for humans because AI doesn’t have this quality of sarcasm.
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Source: https://www.wsj.com/tech/ai/big-tech-strikes-gold-with-ai-but-at-a-steep-cost-f6d82a22?mod=hp_lead_pos5
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.
