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Hyperscaler Debt Is Crowding Out Everyone Else, Says Warsh
Federal Reserve Chair Kevin Warsh named AI borrowing as one of three reasons the 10-year Treasury yield has reached 5%, after the Fed raised its benchmark rate by a quarter point to 3.75-4%. The five major hyperscalers issued $121 billion in U.S. corporate bonds in 2025, against an average of $28 billion a year between 2020 and 2024, according to BofA Securities.
Amazon, Microsoft, Alphabet, Meta, Oracle and CoreWeave entered the bond market while capital was cheap and the data-center race looked like a limited window. Hyperscaler capital spending now runs close to 100% of operating cash flow, with some firms negative, meaning the buildout can no longer be funded from profits. Morgan Stanley forecasts AI-related global debt approaching $570 billion for the full year of 2026.
Source: Fortune · September 17, 2026