Big Tech is becoming hooked on debt to fuel its grandiose visions of AI dominance, a slight shift from years past, when aggressive investments were largely driven by internally generated cash.<\/p>\n
The news: AI-related companies have issued about $140 billion in investment-grade bonds year to date, accounting for 49% of the total investment-grade issuance, according to new analysis from the Kobeissi Letter.<\/p>\n
In high-yield corporate bonds, AI-related companies have accounted for 38% of total issuance, or roughly $21 billion year to date.<\/p>\n
The most headline-making debt raise of the year has been out of Alphabet (GOOG<\/a>, GOOGL<\/a>).<\/p>\n Alphabet became the first tech company in decades to issue a 100-year bond. In total, Alphabet raised $31.51 billion in February across its global bond offering, tapping sterling and Swiss franc markets alongside US dollar issuance.<\/p>\n \u201cThe AI investment boom is reshaping how capital is allocated across the entire financial system,\u201d researchers at the firm said.<\/p>\n The analysis: Google, Amazon (AMZN<\/a>), Microsoft (MSFT<\/a>), and Meta (META<\/a>) collectively plan to allocate $725 billion to capital expenditures in 2026 \u2014 up a staggering 77% from last year\u2019s already record-breaking $410 billion.<\/p>\n Amazon is projecting $200 billion in capital expenditures, Alphabet is targeting $175 to $185 billion, Meta is guiding $115 to $135 billion, and Microsoft is tracking toward $190 billion for the calendar year.<\/p>\n The five main hyperscalers have plans to add roughly $2 trillion in AI-related assets to their balance sheets by 2030. That goes a long way toward explaining the need to take on new debt.<\/p>\n AlphaSpace intel: Singling out Meta, the use of debt to fund AI initiatives is apparent. Meta\u2019s total debt has climbed from about $36 billion in 2023 to $84 billion at the end of the first quarter, according to Yahoo Finance AlphaSpace<\/a>.<\/p>\n Bottom line:\u00a0Hopefully, for the sake of their investors, the top and bottom lines of these debt-hungry tech companies show massive benefits from AI in the years to come. If not, expect the market to more closely scrutinize their balance sheets.<\/p>\n Brian Sozzi<\/a> is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi<\/a>, Instagram<\/a>, and LinkedIn<\/a>. Tips on stories? Email brian.sozzi@yahoofinance.com.<\/p>\n Click here for in-depth analysis of the latest stock market news and events moving stock prices<\/a><\/p>\n Read the latest financial and business news from Yahoo Finance<\/a><\/p>\n