A wave of debt issued by the world's largest cloud operators to bankroll their artificial-intelligence ambitions has turned into a drag on bond portfolios from London to Tokyo, ranking among the worst performers in major credit gauges this year.
The AI Bond Onslaught
The debt fueling the AI boom is now dragging down the world's bond markets
Hyperscaler bonds — Amazon, Alphabet, Meta, Microsoft and Oracle — rank among the worst performers in major credit gauges this year, as a flood of new paper overwhelms investor demand.
$121B
US debt sold by the top five in 2025 — 4× their 2020–24 average
$600B+
Combined 2026 capex — about $450B tied to AI
$200–400B
Projected AI-related investment-grade supply for 2026
New-issue concession: the extra yield to lure buyers
Hyperscalers must pay far more than the broader market to move their debt.
≈ 5× the yield premium of the broader corporate market.
Why the strain: capex outgrew cash, so debt filled the gap
Capex exceeds free cash flow
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Prices fall, spreads widen
Issuers spread debt across dollars, euros, yen, Canadian dollars, Swiss francs and sterling — and into century bonds — to avoid saturating any single market. Tech's weight in the benchmark index has climbed above 10% (from ~9% in 2024), forcing index-trackers to hold ever more of it.
The bright side
Issuers stay robust: post-deal leverage of ~0.4–0.7× vs a ~3× IG average, with some deals 4×+ oversubscribed — fertile ground for relative-value trades.
The concern
With AI capex showing no sign of slowing and more long-dated, multi-currency supply due in 2026, the drag on global credit gauges looks set to persist.
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