The bank says issuance through May already stands at nearly $236 billion, four times the level from the same period last year
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Global AI-related debt issuance is on track to nearly hit $570 billion this year — more than twice last year's total — according to a new forecast from Morgan Stanley $MS cited by Reuters. With hyperscaler capital spending projected to cross $1 trillion in 2027, the bank anticipates the pace of new debt coming to market will pick up over the back half of this year.
Through the end of May, roughly $236 billion in AI-linked debt had been issued globally — a figure that amounts to about four times what had been raised over the comparable stretch of last year. Debt financing is becoming a go-to tool for technology firms whose capital requirements have begun to outpace what their own earnings can cover.
To diversify their funding base, hyperscalers have increasingly sold bonds outside the U.S. dollar market, the bank noted. Morgan Stanley also observed that the sheer volume of new supply has become the dominant force moving bond prices, even as the broader economic backdrop holds up. Among semiconductor firms, Morgan Stanley said, the preferred structure is moving toward amortizing arrangements with nearer-term maturities.
The surge is tied to capital expenditures that keep rising across the sector. Tech companies have reshaped the U.S. investment-grade bond market as Amazon $AMZN, Alphabet $GOOGL, Meta $META, Microsoft $MSFT, and Oracle $ORCL collectively issued $121 billion in U.S. corporate bonds in 2025, compared with an average of $28 billion per year between 2020 and 2024, according to Bank of America $BAC. By Oct. 2025, AI-linked debt had reached $1.2 trillion, making it the largest segment in the investment-grade market and surpassing U.S. banks as the biggest sector in the JPMorgan $JPM U.S. Liquid index, according to M&G Investments.
The math behind the borrowing is straightforward. Hyperscaler capital expenditures in 2026 are on pace to consume close to 100% of operating cash flows, compared with a 10-year average of 40%, according to UBS. Bond markets fill that gap.
The issuance wave is also reshaping retirement portfolios. Because major bond indexes are weighted by market capitalization, every new investment-grade bond that meets index eligibility criteria increases the issuing company's share of the index. Passive bond funds that track those indexes must then buy proportionally more of that debt. Target $TGT-date funds, which held about $4.8 trillion in assets at the end of 2025, hold those bond index funds — meaning many 401(k) investors now have indirect exposure to AI infrastructure debt without having made any active choice to do so.
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