Tech Bonds Weaken as AI Spending and Surging Oil Prices Spook Investors

Bonds issued by major U.S. technology companies fell on Thursday, pressured by a combination of heavy borrowing to fund artificial intelligence infrastructure and broader market anxiety over rising oil prices.

Investors are growing concerned that the hundreds of billions of dollars being spent on AI may be straining corporate balance sheets, while a surge in oil above $100 per barrel threatens to reignite inflation and push borrowing costs even higher.

Debt Markets React

The selling pressure in tech bonds intensified after Alphabet Inc. announced in its quarterly earnings report late Wednesday that it was raising its capital spending forecast for the year. The move signaled continued heavy debt issuance to fund its AI ambitions.

• Yields on Alphabet’s 5.5% bonds maturing in 2046 climbed 9 basis points to 6.11%.
• The spread on those bonds over top-rated government benchmarks widened by 6 basis points to approximately 91 basis points, indicating investors are demanding a higher premium for the perceived risk.
• Oracle Corp., another major player in data-center construction, saw yields on some of its 2030 bonds jump 17 basis points to around 6.09%.
• Credit default swaps, a form of insurance against non-payment, also rose for debt from Microsoft Corp. and Amazon.com Inc., signaling growing risk aversion.

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Broader Market Headwinds

The move in the corporate bond market occurred alongside a significant stock market decline. The tech-heavy Nasdaq 100 Index dropped nearly 2%, and the group of "Magnificent Seven" tech companies posted its largest single-day loss since April 2025.

This year alone, technology companies have borrowed an estimated $350 billion to finance AI-related projects. The sheer volume of this issuance has shown signs of straining debt markets, while some investors question whether the massive investments will generate profits sufficient to justify the spending.