Analysis-Jitters over AI spending set to grow as US tech giants flood bond market ​

Core Insights - Investors are increasingly concerned that the rapid rise in public debt for AI investments may strain the U.S. corporate bond market and reduce the attractiveness of tech stocks, despite current low leverage among major companies [1][3] Group 1: Public Debt Issuance - Since September, major cloud computing and AI platform companies have issued nearly $90 billion in public bonds, with significant contributions from Alphabet ($25 billion), Meta ($30 billion), Oracle ($18 billion), and Amazon ($15 billion) [2] - Hyperscaler debt issuance has surged to over $120 billion this year, compared to an average of $28 billion over the past five years, indicating a significant shift in funding strategies [5] Group 2: Market Reactions - The increase in public debt issuance has raised concerns about the market's capacity to absorb this surge, contributing to a pullback in U.S. stocks after six months of gains, although the S&P 500 remains up 11% this year [4] - Investors are currently not overly worried about stock valuations due to the recent fundraising, as these companies maintain low leverage relative to their size [3] Group 3: Future Implications - The reliance on public bond markets for financing AI initiatives suggests a shift away from private credit markets and free cash flow, indicating a need for capital to transition from stocks to bonds [5] - Rising debt levels among tech companies introduce new concerns, as the anticipated high returns from AI have yet to materialize into profits that justify substantial capital expenditures [6]