Big Tech credit risks surge as AI data centre borrowing accelerates
Major technology firms are ramping up debt to fund massive data centre expansions, prompting heightened scrutiny from markets regarding the sustainability of current capital expenditure levels.
Investors are expressing increasing concern over a sharp rise in credit risks among major technology companies, driven by a surge in borrowing to fund extensive data centre investments. According to reporting by the Financial Times, the rush to secure capital for artificial intelligence infrastructure is elevating leverage levels across the sector, prompting a more cautious outlook from market participants.
The primary driver of this financial exposure is the rapid expansion of data centre capacity required to support growing AI workloads. As technology firms compete to build out the physical infrastructure necessary for machine learning and cloud computing, the associated capital expenditure has necessitated significant debt issuance. This trend has shifted investor sentiment, with markets closely monitoring how increased leverage impacts the balance sheets of these high-growth entities.
While the specific magnitude of credit risk exposure across the broader Big Tech sector remains unquantified in current reports, the narrative of rising debt-fuelled investment is gaining traction. The concern centres on whether the projected returns from AI-driven revenue streams will sufficiently offset the costs of servicing this new debt, particularly in a volatile macroeconomic environment.
Amid these credit concerns, the broader equity market has shown divergent signals regarding AI-related assets. Amazon.com, Inc. recently reported strong fourth-quarter fiscal 2025 results, posting $213.4 billion in revenue and $25 billion in operating income, which contributed to a 31.9% rise in its share price over a single month. The stock has gained 23,545% since its 2002 listing, sustained by strong institutional demand.
Concurrently, institutional investors have continued heavy buying of NVIDIA shares, reflecting confidence in the underlying earnings power of the AI hardware supply chain. However, the Financial Times reporting suggests that while equity performance remains robust, the underlying credit dynamics of the software and services giants are undergoing a fundamental shift as they prioritise infrastructure build-out over balance sheet conservatism.
