Business Insider A handful of Big Tech companies are flooding the market with new bonds as they raise money to fund their sprawling AI projects.
- A top Morgan Stanley portfolio manager says he sees problems in Big Tech's AI debt binge.
- Investor demand has cooled somewhat, leading to higher yields on some bonds.
- Concerns are rising as issuance balloons and credit risk creeps up, Vishal Khanduja said.
Troubling signs are beginning to flash in the AI-fueled debt binge among Big Tech companies, a top Morgan Stanley portfolio manager says.
Vishal Khanduja, the head of broad markets fixed income at the bank, flagged worrying signs he sees in the corporate debt market, particularly among the for Big Tech giants, which have been raising billions of dollars in the bond market to pay for their sprawling AI projects.
One concern that seems to be emerging in particular: Big Tech may be borrowing too much, Khanduja said in an interview with Bloomberg TV on Wednesday.
"I think credit risk is too undervalued right now in the market," Khanduja said, pointing to reports this week that Amazon plans to sell $25 billion in bonds. That issuance was a "surprise," he said, given that many investors thought the tech giant was done borrowing for the year.
Investor demand for the latest Amazon bond offering was reportedly light, and spreads on other bonds issued by Big Tech companies have widened. The spread refers to the yield investors demand to be paid over a benchmark rate, like Treasury yields.
"It's supply, overall," he said of investors' concerns.
Mega-cap tech giants have ramped up their borrowing this year as capex spending outlooks soar. In the first five months of the year, Amazon, Meta, Alphabet, and Oracle — among the biggest borrowers in the AI trade — have issued a combined $159 billion in debt to investors, according to an analysis from the Kobeissi Letter.
Big Tech also accounted for just over 8% of the total US corporate bond market as of the end of May, a record high, according to a Bank of America analysis.
A report from SemiAnalysis, an independent research Substack, that made the rounds online this week estimated the AI debt market will swell to $7 trillion by 2029.
If it follows that trajectory, that would make the AI-linked assets would also represent the second-largest asset-backed securities market after mortgage bonds, JPMorgan strategists wrote on Tuesday.
[Business Insider](https://www.businessinsider.com/ai-debt-big-tech-capex-spending-bonds-morgan-stanley-2026-7)
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