AI Infrastructure Debt Widens Tech Bond Spreads

Investors are selling bonds from major US tech firms as concerns mount over their AI infrastructure debt. The surge in AI infrastructure debt is flooding credit markets and pushing leverage higher. Spreads over US Treasuries have widened to 0.78 percentage points, the highest since April, up from 0.5 points in September. Hyperscalers including Alphabet, Meta, Microsoft and Oracle have issued large high-grade debt to fund massive AI data center projects. JPMorgan estimates the AI build-out will require over $5 trillion across public and private markets, with data center spending projected at $400 billion in 2026. Recent bond sales include Meta’s $30 billion, Alphabet’s $25 billion and Oracle’s $18 billion issuances. Oracle’s long-term debt stands at $96 billion, and its bonds have fallen nearly 5% since mid-September, outpacing peers. Rising credit spreads signal investor wariness about financing the AI boom, with risks including overcapacity, energy demands and reliance on key AI partners. However, strong cash flows and revenue agreements—such as Oracle’s $300 billion projection from OpenAI deals—may mitigate long-term concerns. Traders should monitor bond yields and credit spreads for insights into risk appetite and market stability.