AI Giants Borrow Record $428 Billion in 2025 Amid Investor Caution and Mounting Debt Risks
Global technology companies, racing to dominate the artificial intelligence landscape, issued a staggering $428.3 billion in bonds through early December 2025, nearly doubling previous records and sparking wariness among debt investors.[2]
Hyperscalers like Amazon, Alphabet, Meta, Microsoft, and Oracle have led the charge, borrowing roughly $121 billion specifically for AI and data center expansions this year, with over $90 billion raised in the last three months alone.[1] This unprecedented debt surge reflects the massive capital expenditures required to build sprawling data centers equipped with advanced servers and graphics processing units (GPUs) to meet surging AI demand.
A Frenzy Fueled by AI Ambitions
Traditionally flush with cash, these tech behemoths are tapping bond markets because their operating cash flows can no longer keep pace with explosive growth needs.[1][2] Low borrowing costs and strong investor appetite have made debt an attractive option, but the scale of issuance—U.S. firms alone accounted for $341.8 billion, followed by $49.1 billion from Europe and $33 billion from Asia—has shifted market dynamics.[2]
“Hyperscalers have issued roughly $121 billion in new debt so far in 2025,” noted analysts at BNY Mellon, highlighting how construction of large-scale data centers is outstripping internal funding sources.[1] Wall Street projections paint an even bleaker picture for the future: UBS anticipates up to $900 billion in new global corporate debt in 2026, while Morgan Stanley and JP Morgan forecast the tech sector could need as much as $1.5 trillion over the next few years to sustain AI infrastructure builds.[1]
Investor Jitters and Widening Credit Spreads
The borrowing bonanza is not without consequences. Credit spreads have widened notably for Oracle and Meta, with Alphabet, Amazon, and Microsoft seeing milder increases, signaling growing investor concerns over execution risks tied to these colossal investments.[1] Investors are increasingly buying credit default swaps (CDS) to hedge against potential defaults, with hedging costs rising since June as sensitivity to capital expenditure plans heightens.[1]
Dealogic data underscores the scale: tech debt issuance hit record highs as firms pivot from cash reliance to external financing amid rapid technological obsolescence and short chip lifespans.[2] Michelle Connell, president at Portia Capital Management, described this as a “structural shift,” where continuous reinvestment is mandatory to stay competitive.[2]
Rising Leverage Raises Red Flags
A Reuters analysis of over 1,000 tech firms with market caps above $1 billion revealed median debt-to-EBITDA ratios climbing to 0.4 by September’s end—nearly double 2020 levels.[2] While still below alarm thresholds, this trend shows debt growing faster than earnings, posing risks if AI hype fails to materialize into profits.
Critics like Scott Bickley, advisory fellow at Info-Tech Research Group, warn of an “overheated marketplace” creating a self-serving narrative of “go big or go home” to boost stock prices. “This is neither sustainable nor repeatable,” Bickley argued, cautioning against permanent reliance on debt-fueled expansion.[2]
| Region/Focus | Amount Issued | Notes |
|---|---|---|
| U.S. Tech Firms | $341.8B | Led by hyperscalers like Amazon, Microsoft |
| Global Tech Total | $428.3B | Through early Dec; record high |
| AI/Data Center Specific | $121B | $90B in last 3 months |
| Europe/Asia | $82.1B | Combined; smaller share |
Balancing Act: Cash Buffers vs. Long-Term Liabilities
Despite concerns, the largest players remain profitable with substantial cash reserves and top market valuations, providing a buffer.[2] However, weakening coverage ratios and lifted leverage for some firms underscore vulnerabilities. If AI returns disappoint, balance sheets could strain under the weight of long-term technological liabilities.[1]
The New York Times first spotlighted this trend, noting how AI companies borrowing billions are prompting debt investors to grow wary as risks intensify.[original] Market watchers anticipate continued issuance, but with heightened scrutiny on whether these investments will pay off amid an increasingly cautious credit environment.
Outlook: More Debt on the Horizon
As AI competition heats up, expect the debt tap to remain open. Yet, with CDS costs climbing and spreads widening, investors are recalibrating risk-reward equations.[1] The question looms: Can hyperscalers deliver on AI promises before debt burdens become unmanageable?
This surge marks a pivotal moment in tech financing, where ambition meets fiscal reality in the race for AI supremacy.