AI Fueling Global Debt Surge: Amazon, Alphabet Shatter Records in Non-US Currencies as Spending Skyrockets

AI Fueling Global Debt Surge: Amazon, Alphabet Shatter Records in Non-US Currencies as Spending Skyrockets​

The relentless demand driven by artificial intelligence (AI) is forcing massive technology firms to radically transform their financing strategies. As corporate borrowing related to AI and cloud infrastructure accelerates globally, "hyperscalers" are increasingly issuing bonds outside the U.S. dollar market. This unprecedented shift is reshaping international bond markets and setting new benchmarks for debt sales in various currencies worldwide.

Companies such as Amazon and Alphabet have rapidly ramped up their funding needs, collectively issuing billions of dollars through global bond issuances in the past year. These large-scale transactions are driving historic volume in the euro, sterling, and yen markets.

Hyperscalers Redefine Global Bond Markets with Record Issuances​

The surge in capital expenditures (CapEx) for data centers and chip infrastructure has compelled technology giants to diversify their borrowing base. Teddy Hodgson, global co-head of investment-grade debt at Morgan Stanley, noted that Alphabet and Amazon have successfully diversified into European, Canadian, and Asian markets through these deals.

Amazon recently raised a massive €14.5 billion ($16.56 billion) in March from an eight-part deal. This transaction was noted by LSEG as the largest ever in the euro corporate bond market. Meanwhile, Alphabet set numerous records across various currencies, including its yen, Canadian dollar, Swiss franc, and sterling deals, according to LSEG data. Furthermore, Alphabet successfully sold the first 100-year bond from a tech company since 1997.

The sheer scale of these funding requirements is staggering. Capital expenditure for hyperscalers this year is estimated at approximately $725 billion by BNP Paribas. This figure nearly doubles the level observed in mid-2025, leading analysts to conclude that spending is outpacing operational cash flow and creating an urgent need for external financing.

New Frontiers: Data Center Lease-backed Financing​

In response to mounting funding needs, financial institutions are introducing novel deal structures for data center operators and AI startups. A key innovation involves leveraging pre-arranged data center leases—sometimes agreed upon before physical construction starts—to provide investors with clear visibility into future cash flows.

A notable example is the $810 million note issued by Stingray Compute, which is owned by Cipher Digital. This offer was nine times oversubscribed. According to Cody Gunsch, head of North America leveraged finance capital markets at Morgan Stanley, this specific lending deal was backed by a lease to Amazon.

These innovative structures are not new; the first deals inspired by construction loans began last year. Approximately 15 such transactions have since been successfully sold to high-yield investors. While Stingray Compute did not comment on the transaction, CEO Sundar Pichai of Alphabet affirmed that funding investments through cash flow, debt, and equity remains a core strategy for the company.

Demand vs Supply: Assessing the Future of AI Debt​

Despite the massive supply being introduced into the market, investor appetite for these high-quality bonds remains strong. Victoria Fernandez, chief market strategist at Crossmark Global Investments, affirmed that there is high liquidity and great interest in these hyperscaler bonds.

However, some analysts are beginning to raise concerns about the scale of debt creation. Morgan Stanley’s Hodgson suggested that if current trends continue, AI debt issuance alone could push the investment-grade market above $2 trillion for the first time in 2026. Investment-grade deals from these hyperscalers have already surpassed their full-year 2025 total and are on track to hit BNP Paribas' $250 billion forecast for this year.

Barclays data shows that AI-related debt currently represents about 15% of the total investment grade issuance in the U.S. Scott Schulte, global co-head of investment-grade debt syndicate at Barclays, countered any saturation concerns by stating that this percentage is still very low when viewed against the entire investment-grade credit indices.

Jeff Given of Manulife Investment Management confirmed that hyperscalers are committed to long-term AI and investment projects, keeping the funding pipeline robust. The prevailing view among experts remains that as long as companies continue to expand their investments, a sustained demand for capital will remain in place.