The AI infrastructure financing boom has caused a surge in tech bond supply, triggering falling bond prices and rising yields. High-grade tech bonds have already shown allocation value. At the same time, the capital operation models of tech giants are undergoing a structural shift, with external equity and debt financing replacing internal cash flow. Companies are sharply cutting share buyback quotas, and the cycle of relying on large-scale buybacks to boost stock prices is coming to an end.
Bank of America strategist Michael Hartnett said that tech giants have borrowed heavily to build AI infrastructure, driving sustained selloffs in U.S. tech corporate bonds and pushing bond yields steadily higher, which has created opportunities for investors to buy on dips. This AI financing boom has also fundamentally changed the capital allocation logic of tech companies. The previous phase of relying on internal cash flow for large-scale share buybacks may be coming to an end.
According to Hartnett’s statistics, U.S. investment-grade tech corporate bonds have fallen 9% cumulatively this year, with their performance relative to the overall investment-grade bond index hitting a 30-year low. AI infrastructure financing has generated massive bond issuance demand, directly pushing up bond supply and becoming the core factor weighing on bond prices. Tech giants including Alphabet (GOOGL), Meta (META), Amazon (AMZN), Microsoft (MSFT) and Oracle (ORCL) issued a total of $182 billion in bonds in 2026, more than ten times the $17 billion in 2024. The massive influx of new bonds has continued to depress prices and push yields higher.
The AI bond selloff has pushed up yields across all categories of tech bonds. Hartnett noted that yields on high-quality, high-grade tech bonds have reached 6% to 8%, while yields on lower-rated AI bonds have exceeded double digits. In the high-yield bond market, CoreWeave (CRWV) bonds maturing in 2031 yield 14.26%, Galaxy Digital (GLXY) bonds with the same maturity yield 11.44%, and SoftBank Group bonds maturing in 2034 yield 9.58%.
Alongside the surge in bond issuance, tech giants have simultaneously launched equity financing to raise funds for AI capital expenditures. Bank of America data shows that large tech companies raised $182 billion through bond financing and $890 billion through equity financing this year, with total equity and debt financing reaching $271 billion. Tech companies’ balance sheet management is undergoing major changes. In the past, companies relied on internal cash flow to expand their businesses and used surplus funds for large-scale share buybacks. Now, with AI infrastructure investment continuing to swell, companies have to rely more on external financing.
For a long time, large-scale buybacks have been an important pillar supporting tech stock valuations and earnings growth. After the surge in capital expenditures, however, the funds available to companies for buybacks have shrunk significantly, and this supporting factor has weakened accordingly. Tech companies need to find a new funding balance among expanding AI investment, maintaining credit ratings, controlling financing costs and rewarding shareholders.
