US Tech Giants’ AI Boom Drives $223 Billion Bond Surge, Raising Inflation Concerns

Major US technology companies have more than doubled their bond issuances this year as they raise funds for artificial intelligence infrastructure, according to Jefferies strategist Christopher Wood.

The surge in corporate borrowing has raised concerns over higher inflation and pressure on global interest rates.

In his latest GREED & fear note, Wood said leading technology firms, known as hyperscalers, have raised $223 billion through bond markets in 2026, compared with $108 billion during the whole of 2025.

Alphabet alone raised $29 billion last month as companies accelerate investments in AI capabilities.

AI investment fuels corporate borrowing

Wood said the growing demand for capital from technology companies is now competing with government borrowing requirements, putting additional pressure on long-term funding markets. Bond spreads for companies such as Amazon, Alphabet and Meta have widened in recent months as investors assess higher debt levels.

The strategist linked the borrowing trend to the physical infrastructure required for AI development, including data centres, advanced semiconductor chips and increased electricity consumption.

While artificial intelligence could eventually improve productivity and reduce costs, Wood said the current investment phase is inflationary due to the large amount of real-world resources being deployed.

AI-related capital expenditure has become a major contributor to US economic growth. Wood estimated that AI investment accounted for nearly 48% of the rise in real GDP during the four quarters ending in the second quarter of 2026.

However, he warned that any slowdown in this investment cycle could expose vulnerabilities in the economy.

Long-term AI benefits remain uncertain

Wood highlighted a contrast between the current AI boom and its possible future impact. If AI delivers significant productivity improvements, it could reduce demand for labour and put pressure on wages. However, these effects are expected to emerge only over time.

At present, the AI expansion remains driven by heavy spending and increased corporate debt. Wood said rising government funding needs combined with private-sector borrowing could make it more difficult to contain long-term interest rates.

The strategist believes the pressure on bond markets strengthens the case for assets that can protect against currency weakness. He continues to favour gold and gold-related investments over long-term US government bonds.

According to Wood, the immediate impact of the AI investment cycle remains inflationary, even though the technology could deliver broader economic benefits in the future.