Michael Elsworth
The next phase of the AI investment cycle is increasingly being transmitted through credit markets, with hyperscaler borrowing emerging as a significant new source of fixed income supply.
J.P. Morgan estimates capital expenditure by the five major US hyperscalers (Microsoft, Amazon, Alphabet, Meta and Oracle) will reach US$697 billion in 2026, approximately US$173 billion higher than its estimate at the start of the year. As spending rises, a growing share is being funded through debt. The Bank for International Settlements (BIS) reports hyperscaler gross corporate bond issuance exceeded US$100 billion in 2025, while Reuters reported approximately US$194 billion had been issued by July 2026. Goldman Sachs forecasts full-year issuance of around US$250 billion in 2026 and US$400 billion in 2027.
The implications for benchmarks lie in composition rather than size. The Bloomberg Global Aggregate Bond Index contains more than US$75 trillion of debt and added approximately US$7.4 trillion during 2025, so annual hyperscaler issuance remains modest in absolute terms. However, if AI-related borrowing continues to outpace the broader corporate bond market, the Index’s corporate component could become more technology-intensive and more duration-sensitive, given most hyperscaler issuance in 2025 was for maturities beyond five years. This is particularly relevant for passive and index investors, who take on this exposure without making a deliberate decision on its value.
Financing is also moving beyond the conventional bond market. Special-purpose vehicles, joint ventures and private credit are increasingly used to fund AI infrastructure, creating long-term commitments that may not be immediately apparent from traditional balance sheet analysis.
The near-term effect on global bond benchmarks is likely to be evolutionary rather than transformational. For fixed income investors, however, the AI story is increasingly one of duration, credit supply, leverage and benchmark evolution, and these effects are likely to persist well beyond the current investment cycle.
Read the full insight from Michael Elsworth, Manager, Fixed Income.