AI-Focused Debt Surge Fuels a Bond-Market Opportunity

In 2025, the major cloud-computing firms—Alphabet, Amazon, Meta, Microsoft and others—issued roughly $93 billion of debt to finance AI-related capital spending, a sharp rise from the roughly $35 billion average annual issuance recorded between 2020 and 2024. The trend has continued into the current year, with firms such as Meta announcing a capital plan that could involve up to $95 billion of equity offerings to fund further AI expansion. At the same time, some smaller players face market pressure; CoreWeave’s bonds saw spreads widen in October, and Oracle’s debt was downgraded to the lowest tier of investment grade in July.

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The VettaFi AI Hyperscaler Bond Index, which tracks debt from the core AI-infrastructure companies, posted a yield of 6.51 percent at the end of September. By comparison, the iShares Core U.S. Aggregate Bond ETF (AGG) reported a 30-day SEC yield of 5.06 percent, while the actively managed iShares Flexible Income Active ETF (BINC) delivered a 30-day SEC yield of 5.65 percent as of Oct. 23. Within the investment-grade BBB segment, yields exceed 6 percent, highlighting a relative premium for AI-linked credit.

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Joseph Matus of Cerity Partners described the hyperscalers’ balance sheets as “strong” and their debt as “manageable,” while cautioning that many investors already hold substantial exposure through equity positions. Brian Barnhurst of PGIM Credit warned that the market could see as much as $4 trillion of additional AI-related debt over the next year, and that rising skepticism among institutional investors may pressure valuations.

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• “Investors are willing to give them a bit of a leash. The projects that they've put in place so far are proving to be quite profitable,” — Joseph Matus, principal, Cerity Partners

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• “What makes this proposed ETF particularly exciting is how it marries high credit quality with meaningful yield generation,” — Todd Rosenbluth, head of research and editorial, TMX VettaFi

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Fixed-income strategists suggest that the current environment offers a “generational opportunity” to acquire above-average credit quality at yields that rival high-yield bonds. Nonetheless, diversification remains a key theme; active managers such as Dynasty’s Bob Shea favor flexible-income funds that blend global credit sectors, arguing that concentrated exposure to hyperscaler debt could amplify sector-specific risks.

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