AI-Related Debt Sells Off as Amazon Borrows Another $25 Billion
The tl;dr
The corporate-bond side of the AI trade is starting to wobble. Credit spreads on tech and AI-related debt have widened as investors grow wary of the sheer volume of borrowing, with Amazon adding at least another $25 billion in bonds to fund its data-center buildout, on top of roughly $64 billion it has already raised in 2026. Demand for the new deal was far cooler than the frenzy that met Amazon's record bond earlier in the year, orders settled at about 1.6 times the size, and Oracle's default-risk gauge has crept wider, signs the market is starting to question whether the roughly $400-billion-a-year AI spending spree will pay off.
Key points
- Credit spreads on tech and AI-related corporate debt have widened relative to the broad investment-grade index, the bond market's quiet way of signalling growing unease about the flood of AI borrowing.
- Amazon is raising at least another $25 billion in an eight-part bond sale to fund AI and data centers, on top of about $54 billion of US and European bonds and $10 billion of Canadian bonds it has already sold in 2026.
- Appetite has cooled: orders for Amazon's deal peaked near $62 billion but were pared to roughly $41 billion, about 1.6 times the size, once banks tightened the yield, far short of the frenzy that greeted its record bond earlier this year.
- Oracle's credit-default swaps, a market gauge of default risk, have widened on concerns about its balance-sheet leverage, and Barclays says Big Tech's AI debt binge is testing the high-grade market.
- The core worry is monetization: hyperscalers are spending on the order of $400 billion a year on AI against an estimated $100 billion of realized AI revenue, and the BIS has warned an AI-driven selloff could spread into credit markets.
By the numbers
The AI boom has been an equity story for two years. Now the strain is showing up in a quieter, arguably more important place: the corporate-bond market. Credit spreads on tech and AI-related debt, the extra yield investors demand to hold it over safer government bonds, have widened against the broad investment-grade index. It is the bond market’s understated way of saying it is getting nervous about how much AI-related borrowing is piling up.
The immediate trigger is more supply. Amazon is raising at least another $25 billion in an eight-part bond sale to fund its data-center and AI buildout, on top of roughly $54 billion of US and European bonds and about $10 billion of Canadian bonds it has already sold this year, with capital spending tracking toward some $200 billion in 2026. This time the reception was noticeably cooler. Orders for the deal peaked near $62 billion but were trimmed to around $41 billion, about 1.6 times the size on offer, once banks tightened the yield, a far cry from the frenzy that met Amazon’s record bond earlier in the year. Elsewhere, Oracle’s credit-default swaps, a market gauge of default risk, have widened on worries about the leverage on its balance sheet, and Barclays has warned that Big Tech’s AI debt binge is testing the high-grade market.
Underneath it all is a monetization question. The largest hyperscalers are on track to spend on the order of $400 billion a year on AI, with combined outlays topping $1 trillion across 2025 and 2026, much of it funded with debt rather than cash flow, against an estimated $100 billion or so of realized AI revenue. That gap is what makes bond investors uneasy, and it is why this matters beyond tech: as more of the buildout is financed with borrowing, bond portfolios that used to track interest rates and banks increasingly track the fortunes of a handful of technology giants. The Bank for International Settlements has cautioned that an AI-driven selloff could spread into credit markets and squeeze smaller borrowers. For now the moves are modest, not a rout, but a cooling of appetite for the debt underwriting the AI era is exactly the kind of early signal worth watching.
For years the AI boom was an equity story; now it is becoming a credit story, and that changes who is exposed. Wider spreads raise the cost of the buildout for the companies financing it, and because these are enormous, debt-funded bets, a stumble in AI-related debt could ripple beyond tech into the broad corporate-bond market that pension funds and everyday bond funds hold, which is why even a modest cooling of appetite is worth watching.
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Topics
- ai debt
- corporate bonds
- credit spreads
- amazon
- oracle
- data centers
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