Tech companies dramatically increase debt to finance AI expansion

Source: CritpoTendencia Original Title: Tech Giants Dramatically Increase Debt to Fund AI Expansion Original Link: The fear of a possible bubble in the artificial intelligence sector does not seem to intimidate the big tech companies. The pace of borrowing to expand AI-related projects continues to accelerate rapidly. According to various analysts, this dynamic could become a significant risk for both the economy and the global financial system.

According to data from Moody’s Analytics, tech companies are issuing corporate bonds at an unprecedented rate. Just during the fourth quarter of 2025, these companies issued debt totaling $108.7 billion, mainly aimed at building data centers necessary to support AI development.

Companies like Oracle, Meta, and Alphabet lead the demand for financing to deploy energy infrastructure and large-scale data centers. Both elements are inseparable: without adequate power generation systems, data centers cannot operate. The report states that the last quarter of the year saw the highest corporate debt issuance, with a volume nearly double that of the previous quarter.

This trend shows no signs of slowing down. Just during the first two weeks of January, an additional $15.5 billion was issued. AI expansion thus consolidates as a constant source of capital demand, although it also introduces significant risks, including the possibility of a structural overvaluation of the sector.

Mark Zandi, chief economist at Moody’s, warned that financing high-risk projects through debt could become a systemic problem. “This puts the entire financial system at risk. And if the financial system is at risk, so is the economy,” he said.

The Possible Side Effects of the AI Expansion Race

According to Zandi, the massive issuance of debt introduces a set of risks that are difficult to ignore. These are hundreds of billions of dollars allocated to a technology whose profitability potential is not yet fully proven.

Historically, the issuance of corporate bonds has been associated with heavy infrastructure sectors. These instruments typically finance long-term projects with relatively stable returns over several years. Once issued, bonds can be traded in the secondary market or used as financial instruments, making them a pillar of the traditional financial system.

In the tech sector, however, this type of financing had been marginal, as it did not require large investments in physical infrastructure. The expansion of AI has completely altered this scenario. Developing advanced models requires enormous data centers, which in turn demand massive amounts of energy, forcing the construction of costly and complex generation infrastructure.

The central problem is that tech companies concentrate a substantial portion of profits within major stock indices. Their transition from a secondary role to a leading one in corporate debt issuance means that an increasing portion of economic growth relies on an increasingly leveraged base.

Thus, the potential AI bubble incorporates an additional component of financial fragility that could amplify its effects in the event of a sharp correction.

Is Artificial Intelligence Profitable?

Few today question the strategic importance of artificial intelligence. From social and cultural applications to aspects related to national security, its development is key. However, the current expansion model raises doubts about its economic sustainability, especially if countries like China continue to aggressively reduce development costs.

Some critics emphasize that profitability should be a central concern for investors. If AI and the companies driving it are so profitable, why are they increasingly resorting to debt issuance to finance themselves? asks venture capitalist Paul Kedrosky.

It is true that debt allows obtaining resources without diluting equity participation. However, this does not resolve the fundamental question. The main risk of borrowing without a sufficiently solid income flow is that servicing that debt requires constant and growing capital inflows. In this context, there is an increasing concern that new issuances will be used to cover previous obligations, creating a dynamic that is difficult to sustain in the long term.