How Trillions in New AI Debt Will Test the Bond Market

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Nov 16, 2025

Guy LeBas, the Chief Fixed Income Strategist at Janney Montgomery Scott, discusses the profound implications of AI financing on the corporate bond market. He highlights how tech giants may need to issue trillions in new debt to fund expansive data centers, potentially expanding the investment-grade bond market by 20% annually. LeBas also addresses the risks of this heavy issuance, the impact of new accounting rules on financing, and whether the emerging AI bubble could spill into the bond market.

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INSIGHT

Massive Financing Gap For AI Build-Out

Tech's AI build-out requires trillions across data centers, chips and power, far beyond what cash flows can cover.
That financing gap will push hyperscalers into mainstream bond markets for massive debt issuance.

INSIGHT

Accounting Change Put Data Centers On Balance Sheets

Data centers are now physical assets on hyperscalers' balance sheets after a 2019 accounting change.
That shift forces big tech to borrow directly to finance builds instead of relying mostly on REITs or leases.

INSIGHT

Hyperscalers Could Swell Bond Market Size

Hyperscaler issuance could add roughly 20% to annual investment-grade bond market growth.
That equates to $150–$200 billion of incremental corporate borrowing per year, meaning large new supply for investors.

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In this week's episode of WSJ’s Take On the Week, co-hosts Gunjan Banerji and Telis Demos discuss the lingering economic impact of the U.S. government shutdown and why a lack of crucial inflation and jobs data is making the outlook murky for the Federal Reserve. Next, Nvidia is set to report its third-quarter earnings this week. And Morgan Stanley estimates that only half of the roughly $3 trillion in global data center spending through 2028 could be funded by projected cash flows. So how are tech companies going to fund the rest?

Then after the break, Telis is joined by Guy LeBas, chief fixed income strategist at wealth management and investment banking firm Janney Montgomery Scott, to explore how the AI revolution will be financed. Oracle, Meta and Google parent Alphabet have made bond offerings valued in the tens of billions. LeBas explains that the trillions needed to help fund data centers will force tech hyperscalers to issue massive new debt, potentially increasing the size of the corporate bond market by 20% a year. And he talks about whether the AI bubble could find its way into the bond market.

This is WSJ’s Take On the Week where co-hosts Gunjan Banerji, lead writer for Live Markets, and Telis Demos, Heard on the Street’s banking and money columnist, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead.

As we look ahead to 2026, what major economic, markets or finance question is top of mind for you? We’d love to hear from you. Email the show at takeontheweek@wsj.com.

To watch the video version of this episode, visit our WSJ Podcasts YouTube channel or the video page of WSJ.com