AI boom drives trillion-dollar hidden debt surge as investors grow wary

AI-driven spending by major tech firms has sparked a massive rise in both visible and off-balance-sheet borrowing, prompting concerns among investors.

Quarterly reports from AI-focused cloud providers reveal a bond issuance of $225 billion so far in 2026, suggesting a full-year total near $400 billion. Investors are beginning to show fatigue, as the surge in leverage forces issuers to accept higher premiums over risk-free rates. At the same time, a study shows that hidden debt tied to the five leading U.S. tech giants has exploded eightfold in four years, now reaching $1.65 trillion—more than the $1.35 trillion recorded on their balance sheets.

This concealed borrowing stems from long-term GPU and server purchase contracts and lease deals with data-center operators, which are disclosed only in footnotes. Moody’s estimates off-balance-sheet liabilities at $1.2 trillion, with $820 billion linked to data-centers still under construction. Although rating agencies still assign investment-grade ratings, the shift from asset-light software models to capital-intensive infrastructure marks an unprecedented financing challenge for the sector.