๐จ AI companies are suddenly borrowing a LOT less, just as investors start questioning the $466 BILLION debt boom behind the industry.
Global AI-related debt issuance plunged nearly 80% in three months, from a record $113 billion in June to just $23 billion in September, according to Morgan Stanley data cited by the Financial Times. That's a $90 billion drop in borrowing activity in a single quarter.
Much of the slowdown is mechanical. Borrowers front-loaded massive amounts of debt earlier this year, with cumulative 2026 issuance already more than 4.6 times last year's full-year pace. But investors are also growing warier, credit spreads on bonds from Amazon, Microsoft, Meta and Alphabet widened toward 80 basis points in September, up from around 50, a meaningful move for investment-grade debt from some of the most profitable companies on the planet.
"Everybody's being tapped and everybody's getting a bit tighter," one credit investor told the FT.
Is less borrowing necessarily bad? Not entirely. It could be a healthy pause, letting companies digest debt loads while lenders reassess risk. Morgan Stanley itself is calling it "a pause, not a pullback," expecting a busier Q4 as 2027 capex funding kicks in.
But if lenders are genuinely losing confidence in AI's payoff timeline, tighter financing could delay data centers, slow chip demand, and ripple into broader tech valuations and corporate credit markets well beyond AI itself.
The real question nobody can answer yet: is borrowing slowing because companies need less capital, or because investors are less willing to hand it over?
#AI #CreditMarkets #Debt #Markets #TechStocks
Global AI-related debt issuance plunged nearly 80% in three months, from a record $113 billion in June to just $23 billion in September, according to Morgan Stanley data cited by the Financial Times. That's a $90 billion drop in borrowing activity in a single quarter.
Much of the slowdown is mechanical. Borrowers front-loaded massive amounts of debt earlier this year, with cumulative 2026 issuance already more than 4.6 times last year's full-year pace. But investors are also growing warier, credit spreads on bonds from Amazon, Microsoft, Meta and Alphabet widened toward 80 basis points in September, up from around 50, a meaningful move for investment-grade debt from some of the most profitable companies on the planet.
"Everybody's being tapped and everybody's getting a bit tighter," one credit investor told the FT.
Is less borrowing necessarily bad? Not entirely. It could be a healthy pause, letting companies digest debt loads while lenders reassess risk. Morgan Stanley itself is calling it "a pause, not a pullback," expecting a busier Q4 as 2027 capex funding kicks in.
But if lenders are genuinely losing confidence in AI's payoff timeline, tighter financing could delay data centers, slow chip demand, and ripple into broader tech valuations and corporate credit markets well beyond AI itself.
The real question nobody can answer yet: is borrowing slowing because companies need less capital, or because investors are less willing to hand it over?
#AI #CreditMarkets #Debt #Markets #TechStocks