Artificial intelligence (AI) players have suddenly started borrowing hundreds of billions of $, a surge that is contributing to soaring interest rates and investor nervousness. Almost nothing in 2024 and around 500 billion in nine months since January. The technology sector is raising debt with all its might to finance the chips, servers and data centers that form the AI ecosystem.
The immense cash flows generated by tech giants, from Google to Meta, via Amazon and Microsoft, are no longer enough. Goldman Sachs predicts a further increase in speed in 2027, to reach 1,200 billion $.
“In terms of growth, it’s something we’ve never seen,” assures Chris Della Fave, of the fundraising consulting firm Post Oak, who estimates the share of AI in total private bond issues at 25%, compared to 4% two years ago.
This year, the ecosystem should have borrowed more than the American cable operators to support the entire rise of the Internet or the railway companies during the rail explosion in the United States, adjusted for inflation. So far, the bond market has digested this flow smoothly, but it has had to pay a price.
Even big names like Meta had to offer more than 7% per year, while data center (cloud) specialists went beyond 9%. “More bonds are being issued. Investors have to absorb more, which means those who borrow have to offer higher returns,” explains Chris Della Fave.
And the entire market is concerned, not just the AI builders. “Someone who bought a Treasury bill may decide to buy (debt from) Microsoft,” explains Mark Malek, head of investment at Siebert Financial. “This puts (U.S. government borrowing) rates under pressure.”
This factor is added to the other accelerator of American sovereign rates, namely inflation, fueled by the war against Iran and the high level of energy prices. The rate on 10-year US government bonds, a benchmark on Wall Street, is currently around 5.30%, the highest since 2002.
“Correction risk”
The phenomenon of arbitrage between the two debts, public and private, is reinforced by the fact that speculative funds had until recently accumulated Treasury bills like never before (7% of the total in circulation at the end of 2025). They are likely to reorient their investments more quickly than insurers or pension funds.
Even if the war ended and oil prices slowed, Chris Della Fave projects, “I don’t think yields would fall dramatically, due to the influence of AI debt.”
In addition to the increased cost, some wonder about the risks inherent in AI bonds. A slowdown, even moderate, in the frantic pace of infrastructure development, delays on certain projects or insufficient growth in income could trigger a “massive adjustment” in valuation on the financial markets, of debt but also of stocks, warns Mark Malek.
The Bank of England reported, at the end of September, a “risk of a more marked correction” than in July, a month during which the Nasdaq index, with a strong technological composition, dropped almost 7%. In this context, the “cloud” specialist Oracle is sometimes considered a leading indicator.
Massive debt ($125 billion), cash flow that is crumbling every quarter and a possible schedule slippage on a huge data center project in New Mexico, several lights are red for Larry Ellison’s group.
“If Oracle has a problem, that they cannot pay” a debt maturity, anticipates Mark Malek, “this could lead to a contagion effect” to the entire AI debt.
