AI borrowing binge rattles US markets
asserted
binge → rattle → markets
The world’s richest companies can no longer rely on their massive cash piles alone to stay in the artificial intelligence race and have suddenly started borrowing massively in a shift that is sending repercussions across the world.
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that → rely → world
Rising US interest rates, including on the Treasury bonds that anchor the global economy, are sending tremors through the financial world, and some analysts point to the AI borrowing bonanza as one of the culprits.
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analysts → rise → culprits
From next to nothing in 2024, tech sector borrowing has reached around US$500 billion (S$639.7 billion) in the nine months since January, as Google, Meta, Amazon, Microsoft and others raise debt hand over fist to finance the chips, servers and data centres that power AI.
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that → reach → AI
Goldman Sachs expects a further ramp-up in 2027, to US$1.2 trillion.
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Sachs → expect → trillion
“This is not something that we’ve seen before,” said Chris Della Fave, senior vice-president at fund-raising advisory firm Post Oak Group, who estimates that AI now accounts for 25% of all corporate bond issuance, up from 4% two years ago.
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AI → see → %
In inflation-adjusted terms, the AI sector is expected to borrow more in 2026 than US cable operators did to build out the entire internet, or than railroad companies did during the 19th-century US rail boom.
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companies → adjust → boom
So far, investors have eagerly snapped up the chance to lend to the tech giants, but they have demanded returns that would have been unthinkable for such blue-chip companies not long ago.
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that → snap → companies
Even Meta has had to offer more than 7% a year, while riskier cloud data centre specialists have gone above 9%.
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specialists → have → %
The impact reaches well beyond the companies building AI – their debt is even starting to crowd out demand for the US government bonds that anchor the financial system.
An investor who might otherwise buy a US Treasury bond “might decide to buy Microsoft” instead, said Mark Malek, chief investment officer at Siebert Financial, referring to the tech giant’s bonds.
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Malek → reach → bonds
That shift pushes up the rates Washington pays to borrow, he explained.
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he → push → rates
This adds to the other force driving up US borrowing costs: inflation, fuelled by the war against Iran and high energy prices.
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This → add → Iran
The interest rate on 10-year US government bonds – Wall Street’s benchmark and widely seen as the most important number in global finance, setting the tone for everything from mortgages to car loans – is now above 5.3%, its highest level since 2002.
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rate → see → 2002
Adding to the volatility, hedge funds had piled into US government bonds like never before, holding 7% of all those in circulation at the end of 2025, though that share has since fallen.
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share → add → 2025
Hedge funds, which place big bets on markets, move their money far faster than more cautious investors such as insurers and pension funds.
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which → place → insurers
Even if the war and the oil situation stabilised, Della Fave said, “I wouldn’t expect the yields to dramatically reduce, to be honest, because of this influence of the AI debt situation”.
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yields → stabilise → situation
Beyond the rising cost of borrowing, some are questioning the risks of betting on an AI boom that could hit a wall, as the dot.com bubble did in 2000.
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bubble → rise → 2000
Even a moderate slowdown in the frenzied pace of construction, delays on certain projects or weaker-than-expected revenue growth could trigger a shock in financial markets, Malek warned.
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Malek → expect → markets
In late September, the Bank of England’s Financial Policy Committee warned that “the risk of a sharper correction persists”, particularly if concerns about the pace of AI development or adoption hit earnings expectations.
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concerns → warn → expectations
In July, amid some second-guessing about the AI boom, the tech-heavy Nasdaq index fell nearly 7%.
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index → fall → boom
Against this backdrop, cloud specialist Oracle is sometimes seen as a bellwether.
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Oracle → see → bellwether
With massive debt (US$125 billion), cash reserves that shrink every quarter and a possible delay on a huge data centre project in New Mexico, several warning lights are flashing for Larry Ellison’s group.
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lights → shrink → group
“Let’s say Oracle has a problem...
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Oracle → let → problem
They can’t pay for something,” Malek said.
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Malek → pay → something
Trouble with its debt “could trigger contagion” across AI finance as a whole, he added.
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he → trigger → whole
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