Tech Giants Turn to Debt Markets as AI Buildouts Strain Cash

The artificial intelligence infrastructure race is fundamentally changing how technology investors need to think about interest rates and Federal Reserve policy.

Companies that once maintained fortress balance sheets are now tapping debt markets at unprecedented scale to fund data center construction. Amazon, Alphabet, Microsoft and Meta are projected to deploy a combined $750 billion in capital expenditures this year alone—an increase of more than 80% from 2025, according to details first reported by CNBC.

That shift is making the sector vulnerable to borrowing costs in ways it hasn't been for years. "Tech investors are not as used to looking at rates," Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, told CNBC. "All of a sudden tech investors need to listen to what Kevin Warsh has to say."

Why it matters

This represents a structural change in how megacap technology companies operate. For the first time since the dot-com era, capital expenditures as a percentage of cash flow have reached historic highs, according to Goldman Sachs analysis. The firm expects total capex could reach $920 billion this year, noting that analyst estimates have proven "too conservative" for three consecutive years. When companies this large become dependent on debt markets, their valuations become sensitive to macroeconomic conditions they previously ignored.

Debt issuance accelerates

Nvidia, Oracle, Amazon, Alphabet and Meta are each issuing tens of billions of dollars in bonds. The trend extends beyond public companies—OpenAI CFO Sarah Friar has cited access to debt markets as one motivation for the company's planned public offering. Reuters reported that bankers for SpaceX, which recently debuted on the Nasdaq, are preparing to meet investors about a bond offering of at least $20 billion.

"Tech leadership is embracing debt," said Jeff Kilburg, CEO of KKM Financial. "It's the perfect recipe for these AI folks who feel comfortable in what they want to borrow, and spend."

Cash reserves under pressure

The capital intensity is depleting reserves that took years to accumulate. Amazon, forecasting roughly $200 billion in spending this year, is widely expected to report negative free cash flow. Goldman Sachs noted that the current capex-to-cash-flow ratio matches levels last seen during the dot-com bubble.

"Tech investors are learning what it's like to be an investor in old-economy industrial businesses that are capital intensive," Boockvar said. "Free cash flow is volatile and access to both debt and equity markets are crucial in order to finance it all."

The Federal Reserve's latest policy signals have already demonstrated the new dynamic. When Fed Chairman Kevin Warsh indicated the possibility of a rate hike in 2026 during his first press conference, equities sold off and the 10-year Treasury yield rose to near 4.45%.

Not all analysts view the debt issuance as problematic. Jay Woods, chief market strategist at Freedom Capital Markets, said he's evaluating risk on a company-by-company basis. Nvidia, for instance, reported free cash flow of $48.5 billion in its latest quarter, up from $26.1 billion a year earlier. "They still have a deep cash bench, so I don't think it's that big of a red flag," Woods said.

These details were first reported by CNBC.