AI expansion spawns the largest technology debt wave in history, exacerbating credit market risks.

Wall Street warns that with large tech companies leading an unprecedented wave of bond issuance, the global credit market may face "supply indigestion" in the coming years, potentially putting pressure on bond markets in Europe and the United States. If companies like Alphabet (GOOG.US, GOOGL.US) and Meta (META.US) continue their pace of massive bond issuance until 2026, the already record-breaking annual issuance volume may further increase spreads, triggering deeper doubts in the market about AI investment returns and asset bubbles. According to Morgan Stanley's estimates, tech giants may accumulate up to $1.5 trillion in debt funding by 2028 to expand their artificial intelligence and data center infrastructure. This implies that overall bond spreads in the market may passively rise, as bond investors begin to question whether they are receiving enough risk compensation in the context of recent tech stock volatility and the increasing AI investment fervor. Morgan Stanley strategist Matthew Bailey warns that large-scale data center financing could lead to "bidirectional oversupply" in the U.S. dollar and euro markets. Several record-breaking issuances have already occurred this year: Alphabet raised $17.5 billion in the U.S. and 6.5 billion in Europe, while Meta issued bonds as high as $30 billion, with order books peaking at $125 billion, marking a historic high. Oracle Corporation also completed a hefty $18 billion issuance, demonstrating strong market demand. However, concerns about potential supply pressures are mounting. Hedge fund Man Group points out that even high-yield companies like former Bitcoin mining firms are joining the financing wave for data centers, but with aggressive project progress and high reliance on lease contracts, their credit quality is worrying. The research team believes that if there is a further "low rating issuance wave" in the AI field, the market may struggle to bear it. Morgan Stanley estimates that the capital expenditure of five companies - Alphabet, Meta, Amazon.com, Inc. (AMZN.US), Microsoft Corporation (MSFT.US), and Oracle Corporation (ORCL.US) - will increase to $570 billion in 2026 from $125 billion in 2021. UBS Group AG predicts that next year's tech bond supply may surpass $900 billion. Morgan Stanley warns that big tech companies, due to their strong balance sheets and insensitivity to financing costs, can offer higher spreads for new bonds, forcing other issuers to reprice in the market and further pushing up the overall cost of bonds. TD Securities forecasts that the spread of investment-grade bonds in the U.S. will expand to a range of 100-110 basis points in 2026, higher than this year's 75-85 basis points, partly due to the explosive growth in bond issuance. Investment-grade corporate bond issuance in the U.S. may hit $2.1 trillion next year, setting a new record. Nevertheless, investment demand remains strong, especially in Europe. Marco Stoeckle, Head of Strategy at Deutsche Bank, points out that European investors still have a low allocation to high-quality U.S. tech bond issuances, so the issuance of Euro bonds by large tech companies will remain attractive in the future as long as their credit remains strong and demand is not a problem. Several institutions also warn of "profit-taking risk." HSBC predicts that global investment-grade issuance will continue to grow in 2026, with AI-related capital expenditure becoming one of the most important structural forces in the bond market. However, Tracy Chen, Investment Manager at Brandywine Global, notes that as generative AI projects have yet to produce returns (a MIT report shows that 95% of enterprises have seen "zero return" on GenAI investment), refinancing pressures and peak maturities of tech company debt could become riskier if the macro environment deteriorates in the future.