Big Tech’s Long-Term Bonds Trade Like Junk as AI Spending Stokes Investor Concerns

Long-dated bonds issued by leading U.S. hyperscalers are trading with credit spreads near those of BB-rated (junk) bonds, even though the companies themselves retain strong investment-grade ratings. The move reflects investor unease over the sheer scale and multi-year horizon of artificial intelligence capital expenditure.

Investors are demanding significantly higher yields to hold this paper, not because of immediate default concerns but due to the uncertainty around how and when these massive AI investments will pay off. The spending plans extend far into the future, creating a risk premium that is temporarily pushing spreads up.

The widening gap underscores how the AI boom is reshaping even the safest corporate bond market segments, with the duration and opacity of tech firms' spending plans weighing on long-term debt valuations.