As per Morgan Stanley’s latest forecast, AI-related global debt issuance will more than double to nearly USD 570 billion in 2026, as rising bond supply and credit market activity show hyperscalers turning to alternative funding sources to meet massive capex needs.
“Tech companies that have long relied on strong cash flows are increasingly turning to debt financing as investment needs surge,” Morgan Stanley noted, while estimating that AI-related global debt issuance stood at nearly USD 236 billion as of May 31, 2026, fourfold more than the same period in 2025.
Hyperscalers Alphabet, Amazon, Microsoft, and Meta are expected to spend USD 700 billion in outlays in 2026 alone. While debt issuance will ramp up in the second half of the year, by 2027, hyperscaler capex will surpass the USD 1 trillion mark.
“Hyperscalers have been broadening their investor base through non-USD issuance. Fundamental (economic) backdrop remains strong, but for now we think (bond) price action is being mostly driven by supply expectations,” the brokerage said.
The sheer volume of new supply has become the dominant force moving bond prices, even as the broader economic backdrop holds up. Among semiconductor firms, Morgan Stanley said, the preferred capital-raising structure is moving toward amortizing arrangements with nearer-term maturities.
“Financing for chip companies, which is seeing an uptick in public and private markets, is shifting to shorter-term deals that are fully repaid over time,” it added further.
Apart from Morgan Stanley, Bank of America too sees tech companies reshaping the US investment-grade bond market, with Amazon, Alphabet, Meta, Microsoft, and Oracle collectively issuing USD 121 billion in dollar-backed corporate bonds in 2025, compared with an average of USD 28 billion per year between 2020 and 2024.
“Hyperscaler capital expenditures in 2026 are on pace to consume close to 100% of operating cash flows, compared with a 10-year average of 40%. Bond markets are filling that gap,” stated UBS.