Global tech companies are borrowing record levels of debt to fund artificial intelligence investments. U.S. firms issued $341.8 billion in bonds in 2025, with European and Asian companies issuing $49.1 billion and $33 billion, respectively. Debt helps finance AI capex due to rapid technological obsolescence. Leverage and coverage ratios may be affected if AI investments do not deliver expected returns.

While some firms are seeing rising debt levels, the biggest tech companies remain profitable with strong cash reserves. Median debt-to-EBITDA ratio for tech firms rose to 0.4, nearly double the 2020 level. Operating cash flow-to-total-debt ratio hit a five-year low of 12.3% in the second quarter before recovering slightly.

Investor caution is rising in credit markets, with CDS spreads on Oracle doubling in the past two months. Microsoft’s spreads have climbed as well. Analysts warn of an overheated marketplace creating a self-serving narrative of “go big or go home” in stock prices. This shift in operating modes may not be sustainable for tech giants.

Read more at Yahoo Finance: AI spending spree drives global tech debt issuance to record high