Big Tech's AI Debt Binge Threatens Government Funding

The Competition for Capital

Governments used to have the bond market's biggest appetite more or less to themselves. Now they have company, and it comes with a server farm attached.

The Numbers Behind the Borrowing Spree

Four of the largest US tech companies plan to spend about $650 billion on AI infrastructure in 2026. Widen the lens to all hyperscalers, and capex estimates for the year exceed $800 billion to $1.1 trillion.

The Transparency Problem

Tech firms have moved more than $120 billion of AI data center spending off their books through special purpose vehicles, or SPVs, and leasing arrangements. Think of an SPV as a separate company created to own the asset and carry the debt. The tech giant uses the data center and pays for it over time, but the borrowing sits elsewhere.

The Implications

Bond buyers have noticed. Even investment-grade names are paying up. Investors are demanding yields above 7% from Meta, a company that is not exactly short on revenue. Oracle offers a sharper warning sign. Based on recent credit default swap spreads, its implied 5-year default risk has moved above 20%. CDS contracts work like insurance against a borrower failing to pay. When that insurance gets pricier, the market is signaling more worry.

The Macro Backdrop

Global debt hit a record $365.5 trillion in the first half of 2026. The US is still running high fiscal deficits, which means Treasury needs a steady stream of buyers for new government debt.