AI borrowing by tech firms more than halves in September

Tech companies borrowed $23 billion worldwide in September to pay for artificial intelligence projects. That is less than half of what they borrowed in August, according to Morgan Stanley ↗ 0.33% data on public bonds and private placements. The slowdown follows months of heavy borrowing, and it comes as investors question whether the spending will pay off.investing+2

Monthly AI-related issuance has fallen steadily since June, when companies raised a record $113 billion for data centers, chips and other infrastructure. The change is clearest in the US investment-grade market. Blue-chip tech groups sold about $306 billion of bonds there between January and August, but AI-related bond sales in that market stopped entirely in September.news.futunn+1

Why borrowing slowed

Morgan Stanley said the main reason was the large amount of debt companies had already raised earlier in the year. It also pointed to investor doubts about returns and growing political opposition to building data centers. Even after the slowdown, companies have raised about $466 billion in AI-linked debt so far in 2026, compared with $101 billion in the same period last year. In June, the bank predicted that AI-related issuance would reach close to $570 billion for the full year, Reuters reported.investing+3

The flood of new bonds and loans has let credit investors demand higher yields on some deals. That has pushed up borrowing costs for the largest cloud providers. Jordan Rieger of Monarch Alternative Capital called the slowdown "a healthy pause" that lets lenders ask whether "the structural design of these credit‑financing instruments" is sound.investing+1

Large deals still to come

The pause will test several large chip-financing deals now being put together. Wall Street banks are assembling a $60 billion financing package for Broadcom ↘ 0.55% and Anthropic. SpaceX is in talks to raise $40 billion to buy Nvidia ↘ 1.84% chips. Both deals are expected to be sold to a wider group of investors in the coming months.investing+1

Opposition to data centers

Residents in many parts of the US have opposed data centers, citing concerns about water supplies and air quality. Oracle's ↗ 3.00% "Project Jupiter" campus in New Mexico has become a focus of the dispute. Oracle issued a force majeure notice, a formal claim that events outside its control are holding the project back, after the site struggled to get access to electricity. About $18 billion of loans tied to the project have come under strain since then. According to people familiar with the deal, the loans were privately quoted at around 85 cents on the dollar in recent days.investing

Rob Dafforn, chief investment officer at distressed-debt investor Polus Capital, said financing costs on some deals "remain stubbornly high." He added that uncertainty over when projects will pay off makes it hard to tell where "the true value is being realized".news.futunn

"We can only hope the train doesn't derail," Rieger said.news.futunn