NEW YORK, United States: The world’s biggest technology companies are increasingly relying on borrowing to fund their artificial intelligence expansion, a shift that is creating fresh concerns across financial markets as debt levels rise.
Companies including Google, Meta, Amazon and Microsoft have sharply increased borrowing to finance the chips, servers and data centres needed to support AI development. Tech sector borrowing has reached around $500 billion since January, compared with almost no borrowing activity in 2024, according to market estimates.
AI investment drives debt growth
Goldman Sachs expects technology companies’ AI-related borrowing to increase further, potentially reaching $1.2 trillion in 2027.
Chris Della Fave, senior vice president at fundraising advisory firm Post Oak Group, said AI now accounts for around 25 per cent of corporate bond issuance, compared with 4 per cent two years ago.
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The scale of borrowing has drawn comparisons with major infrastructure investment periods, with analysts noting that AI companies are expected to borrow more this year than some historic US investment booms.
Higher borrowing costs create pressure
Investors have continued to buy technology company bonds, but they are demanding higher returns than in the past. Meta has reportedly offered yields above 7 per cent, while some cloud data centre companies have offered rates exceeding 9 per cent.
The increase in corporate debt is also affecting demand for US government bonds, which are considered a foundation of global finance.
Mark Malek, chief investment officer at Siebert Financial, said investors who might otherwise buy Treasury bonds could choose corporate debt from companies such as Microsoft, contributing to higher government borrowing costs.
AI market faces correction risks
Analysts have warned that a slowdown in AI investment, delays in data centre projects or weaker-than-expected revenue growth could create pressure across financial markets.
The Bank of England’s Financial Policy Committee recently warned that the risk of a “sharper correction” remains if concerns emerge over AI development or adoption.
Oracle has emerged as a company being closely watched due to its large debt burden and major AI infrastructure commitments. Analysts warned that financial problems at a major AI player could spread across the wider sector.
