The AI Spending Frenzy Is Just Beginning! Tech Industry May Borrow Another $500 Billion for Chips

Citadel Securities forecasts that technology companies may issue more than $500 billion in new debt across public and private markets by 2028 to finance the purchase of chips for artificial intelligence (AI) data centers—a scale large enough to form a new industrial segment within the investment-grade bond market.

Jeff Eason, Chief Investment-Grade Bond Analyst at Citadel Securities, stated that this volume of debt would represent over 5% of the size of Bloomberg’s U.S. Investment-Grade Bond Index by 2028. Most bonds are expected to have maturities between three and five years, aligning with the typical lifespan of AI chips, with some potentially issued as Rule 144A private placements targeted at qualified institutional investors.

Eason acknowledged that the $500 billion estimate might still be conservative. Financing for AI chips has the potential to become one of the largest emerging sectors in the investment-grade credit market—an unprecedented scale compared to today’s bond markets.

To date, global markets have absorbed approximately $570 billion in AI-related debt, mostly issued by 'hyperscale cloud providers' such as Amazon (AMZN-US), Microsoft (MSFT-US), and Google (GOOGL-US), which are aggressively building large-scale data centers. Since last year, the U.S. market alone has taken on about $60 billion in short-term debt with maturities of up to five years.

However, these amounts are just a fraction compared to the wave of chip financing soon to hit the market. Eason estimates that chipmakers alone could issue over $250 billion in bonds in 2028—more than investors have ever had to absorb at once.

Leading AI labs such as OpenAI and Anthropic continue to burn through cash rapidly as they expand, increasingly relying on complex debt structures and payment guarantees from large corporations to access the deep, liquid investment-grade bond market.

Earlier this year, Anthropic secured around $35 billion in financing to purchase Google’s custom Tensor Processing Units (TPUs), making it one of the largest private credit transactions in history. Broadcom (AVGO-US) provided payment support for the largest tranche of senior debt, enabling Wall Street banks to trade portions of the claims.

Citadel Securities believes the influx of numerous AI chip bonds may force investors to reduce holdings in technology, media, and telecommunications (TMT) bonds to make room for allocations. This is not merely an expansion of financing—it could transform the composition of the investment-grade bond market, establish new benchmark industries, influence yield spreads, portfolio strategies, and the overall allocation of capital across the AI ecosystem.