U.S. tech giants’ $1 trillion AI spending could lift euro zone borrowing costs

  • U.S. tech giants are tapping euro zone bonds to finance AI investments.
  • Big tech has €40 billion in euro zone bonds and nearly 10% of new issuance.
  • Amazon and Alphabet are the euro zone’s largest corporate issuers this year.

U.S. hyperscalers (large-scale cloud and technology companies) are turning to global debt markets to help finance potentially as much as $1 trillion in AI-related investment by 2028. An ECB blog post says their growing presence in the euro zone bond market could crowd out other borrowers, raise financing costs across sectors and increase credit risks. The companies have about €40 billion ($46 billion) of euro zone bonds outstanding but account for nearly 10% of gross new issuance. Amazon and Alphabet have been the largest corporate issuers in the market this year. The blog cautions that investor capacity, benchmark-tracking passive funds and potentially overoptimistic credit ratings could amplify pressure on competing bonds and lead to mispricing of credit risk. It also notes that the post does not necessarily reflect the ECB’s views.

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