Xiaomo: AI capital investment supports the continued expansion of technology companies, and the scale of debt issuance may reach 540 billion US dollars this year

The Zhitong Finance App learned that as global tech giants continue to increase the construction of artificial intelligence (AI) infrastructure, corporate financing needs are growing rapidly even though investors' enthusiasm for AI investment has cooled down. J.P. Morgan's latest report predicts that the technology, media and telecommunications sector bond issuance scale will reach 540 billion US dollars in 2026, a further increase from the previous forecast of 450 billion US dollars, a record high.

J.P. Morgan strategist Erica Spear and others said in a report released on Friday that large technology companies continue to expand AI infrastructure, push the scale of debt financing to continue to rise, and reinforce the bank's judgment that “relying on debt financing to support AI investment will become an important feature in the next few years.”

J.P. Morgan predicts that in 2026, the scale of bonds issued by hyperscale cloud service providers will reach US$317 billion, accounting for most of the annual technology industry bonds issued. Of this, the data center project is estimated to be around US$85 billion in financing.

The report points out that if most of the currently planned data center projects are successfully implemented, the data center financing scale alone is expected to easily exceed 100 billion US dollars.

In addition, J.P. Morgan has identified seven new investment-grade data center financing opportunities. In addition to the six projects previously funded, four of the additional projects are expected to come from data center construction in collaboration with Oracle (ORCL.US) and OpenAI.

The report also predicts that Meta Platforms (META.US) will return to the bond market after announcing its third-quarter earnings report, while Microsoft (MSFT.US) is currently the biggest “unknown.” If Microsoft chooses to issue bonds for financing, it will be the first time since 2017 that it has entered the bond market.

J.P. Morgan believes that the AI infrastructure financing model will further evolve in the future.

The report points out that the financing of AI chips as basic assets will become an important direction for the next stage of AI infrastructure financing. By the end of this century, the market size may even reach trillions of dollars.

However, as the scale of AI-related bond issuance rapidly expands, the market is also beginning to worry that investor demand will decline due to oversupply.

J.P. Morgan pointed out that the weak performance of bonds issued by SpaceX (SPCX.US) and Amazon (AMZN.US) in the secondary market this summer reflects a decline in investors' willingness to accept the continued increase in bond supply.

According to the data, after the market absorbed an additional supply of about 75 billion US dollars of additional bonds in June and July, credit spreads on some hyperscale technology enterprise bonds widened by about 15 basis points at one point.

Although credit spreads have been fixed in the past week, Spear said that there is still great uncertainty about the record bond issuance scale and future financing schedule, making investors more and more concerned about future long-term supply pressure rather than the issuer's basic credit quality.

Recently, Oracle has received market attention due to its credit rating being downgraded globally by S&P, and the credit spreads on its bonds are close to the level of junk bonds.

However, J.P. Morgan still maintains an “excess” rating on Oracle bonds, believing that they still have high relative value among hyperscale technology companies. “We are willing to be patient,” Spear said.

In addition to hyperscale cloud service providers, other technology companies are also active in financing activities.

J.P. Morgan almost doubled its forecast for issuing non-hyperscale technology corporate bonds in 2026, rising sharply from the previous $78 billion to $146 billion, mainly reflecting the $25 billion bond issue completed by Nvidia (NVDA.US) in June this year.

Although the market is still concerned about whether AI investment is too large, J.P. Morgan believes that the good financing and operating records of large technology companies in the past are worthy of the market's “higher trust than current sentiment.”

However, at the same time, the bank warned that this year's bond supply pressure is far from over, and a large number of financing projects may be launched in the future. While the pace of issuance is still uncertain, fluctuations in the bond market are expected to continue.