AI's $500 Billion Borrowing Wave Competes with U.S. Government for Bond Buyers

According to Benzinga, four companies are driving most of the new corporate bond supply related to AI infrastructure. Reuters analysis of LSEG data shows that Amazon (AMZN-US), Alphabet (GOOGL-US), Meta Platforms (META-US), and Oracle (ORCL-US) have issued about $194 billion in bonds through early July for maturities up to 2026, a 79% increase from about $108 billion for all of 2025.

Goldman Sachs expects that these four companies, plus Microsoft (MSFT-US), will issue $250 billion in bonds this year, rising to $400 billion by 2027.

Including equity financing, the total amount raised expands further. As of July 22, the same five hyperscale cloud providers have collectively raised $302 billion through stock and bond issuances.

Goldman Sachs separately estimates that global AI-related debt supply so far this year has reached $489 billion, already surpassing its full-year 2025 estimate of $322 billion. Fortune notes that since the beginning of 2025, Alphabet, Meta, Amazon, and Oracle have collectively issued over $300 billion in bonds.

Now, this debt supply is directly competing with the U.S. Treasury's own borrowing needs. According to Barclays data reported by Reuters, AI-related debt currently accounts for about 15% of total investment-grade bond issuance.

Another Reuters report, citing a strategist, states that AI-related bond issuance accounts for about 15% of the total duration supply of long-term bonds offered by the U.S. Treasury to the market.

Apollo economist Torsten Slok warns that as bond supply from hyperscale cloud providers continues to rise, a fundamental question is emerging: who will be the marginal buyer of investment-grade bonds as supply keeps climbing?

Meanwhile, the U.S. federal fiscal deficit is currently approaching $2 trillion annually, with interest payments alone totaling about $1 trillion, leaving the Treasury with little room to compete with corporate bonds at higher yields.

Investors are beginning to push back on pricing. A Wall Street Journal report indicates that $75 billion in bonds issued collectively by Nvidia (NVDA-US), SpaceX (SPCX-US), and Amazon were difficult to absorb in the market, with prices falling quickly after pricing.

This year, bonds issued by hyperscale cloud providers have seen spreads widen across various maturities. When Amazon recently issued $25 billion in bonds, it had to offer higher yields to complete the issuance.

The pressure is also reflected in the U.S. Treasury market. The yield on 30-year U.S. Treasuries broke above 5.33% on Tuesday, with CNBC directly linking this to hyperscale cloud providers' bond issuance, further adding to an already crowded long-end bond market supply.