Big Tech companies hit new milestones in asset-backed securitization (ABS) financing to fund AI infrastructure capex expansion.
America's largest technology companies are projected to borrow a record $420 billion in 2027 to finance the artificial intelligence boom as Wall Street investors increasingly demand higher returns to absorb the flood of debt. Debt issuance from hyperscalers is expected to jump 60% from 2026 levels as companies pour capital into data centers, chips, and other AI infrastructure, according to Goldman Sachs data reported by Reuters. This borrowing surge is beginning to reshape the corporate bond market, with investors charging AI-linked companies substantially more than other highly rated borrowers.
Spreads on debt issued by AI-related companies are hovering around 115 basis points, compared with 78 basis points across the broader investment-grade market, according to Goldman Sachs and ICE BofA data. A wider spread means a company must pay investors a higher yield relative to comparable U.S. government debt.
"We're being very selective in terms of how we invest within hyperscaler debt," said Colby Stilson, head of fixed income at Brown Advisory. "Our degree of investment conviction needs to be very high because of the coming supply and because of the lack of visibility into that return on invested capital."
The higher borrowing costs are emerging despite companies such as Meta and Alphabet maintaining strong balance sheets and generating large cash flows. Investors instead appear increasingly concerned about how much additional debt will hit the market as companies race to construct the infrastructure needed to compete in AI.
Alphabet was forced to offer investors a sizable pricing concession to complete an August bond sale, according to BNY research cited by Reuters. Some highly rated AI borrowers are even issuing bonds at spreads more commonly associated with lower-rated companies, according to BlackRock Deputy Chief Investment Officer for Global Fixed Income Russell Brownback.
The contrast was pronounced outside the technology sector. Insurance broker Aon drew roughly $65 billion in orders for $13.5 billion of acquisition financing in September, while investors sought bonds from companies outside the hyperscale boom.
Big Tech has dramatically increased spending on the physical infrastructure required to develop and operate AI systems. Amazon, Microsoft, Alphabet, and Meta are projected to spend roughly $450 billion to $500 billion on AI infrastructure in 2026, according to a Nomura investment outlook.
Big Tech raised a record $108 billion in debt in 2025, more than three times the average over the previous nine years, according to Nomura. Companies have turned to special-purpose financing vehicles and asset-backed securities to fund data-center construction outside their traditional corporate borrowing.
Some institutional investors are approaching single-company exposure limits after counting debt issued through data-center financing vehicles alongside bonds issued directly by their corporate parents. "Investors are only able to digest so much, so fast," said Thornburg Investment Management portfolio manager Lon Erickson. Wellington Management portfolio manager Loren Moran expressed similar concerns to Reuters.
Amazon paid an additional 18 to 21 basis points of yield on the longest-dated bonds in its $25 billion July offering. A $12 billion bond sale tied to a Meta data center in Texas was expected to yield about 7.5%, roughly 0.4 percentage points above a similar Meta deal from October 2025.