Tech giants deplete cash, deploy $750B capex via debt as rates loom

Amazon, Google, Meta, and Microsoft are projected to collectively spend $750 billion on AI infrastructure this year, up 80% from 2025, with much of the expansion financed through debt issuance. Nvidia, Oracle, Amazon, Alphabet, and Meta are each raising tens of billions in the bond market, a strategy underscored by OpenAI CFO Sarah Friar's stated motivation to pursue an IPO partly to access debt markets. Goldman Sachs forecasts capex will reach $920 billion industry-wide—closer to the peak as a share of free cash flow since the dot-com era.

This marks a structural shift for megacap tech companies historically shielded from rising rates by massive cash balances. As the Federal Reserve signaled possible rate increases in 2026, the 10-year yield spiked to 4.45%, exposing AI builders to refinancing risk if rates continue climbing. Companies like Amazon are now expected to see negative free cash flow despite record revenue, forcing reliance on capital markets at precisely the moment borrowing costs are rising.

Analysts caution that hyperscalers are now borrowing like "old-economy industrial businesses," where access to both debt and equity markets becomes mission-critical. SpaceX, which went public last week, is preparing a $20 billion-plus bond offering. The shift signals that AI infrastructure spending has moved from a discretionary, internally-funded buildout to a long-term capital-intensive model that ties tech companies' financial health directly to the cost of borrowing.