Moody’s, Jefferies warn of credit risks in Big Tech’s AI debt binge

The credit risks lurking beneath the artificial intelligence infrastructure boom moved into sharper focus this week as both Moody's Ratings and Jefferies ↗ 0.50% issued warnings about the mounting debt loads of America's largest technology companies.

Moody's warned that six major hyperscalers — Alphabet ↗ 0.24%, Amazon Amazon.com, Inc. ↘ 0.66%, Meta ↘ 1.80%, Microsoft ↗ 0.03%, Oracle ↘ 4.21%, and CoreWeave — are accumulating debt at a pace that threatens their long-standing credit quality. The agency projected these companies will collectively invest approximately $785 billion this year, with spending approaching $1 trillion by 2027. Separately, Jefferies reported on Thursday that hyperscalers are increasingly funding their AI buildout through debt rather than cash, with combined capital expenditure estimated at $695 billion in 2026 and $870 billion in 2027.aninews+2

Off-Balance-Sheet Exposure

A central concern raised by Moody's is the scale of obligations that remain hidden from investors under current accounting rules. According to an earlier Moody's analysis, the top five U.S. hyperscalers have accumulated $662 billion in future data center lease commitments that have not yet commenced and therefore sit entirely off their balance sheets. Combined with other commitments, total undiscounted future lease exposure reaches $969 billion. Moody's accounting analysts David Gonzales and Alastair Drake calculated that the unrecorded $662 billion is equivalent to 113% of these companies' most recent adjusted debt.x+1

By 2026, an estimated $821 billion in leases and expenses are expected to be incurred that will not appear on balance sheets, according to the Forbes report citing Moody's data.forbes

Circular Deals and Revenue Questions

Moody's also flagged a web of interconnected investments — Microsoft backing OpenAI while selling it cloud services, Amazon investing in Anthropic while hosting its workloads, and Nvidia ↘ 0.92% taking equity in OpenAI in exchange for chip commitments — as a source of "circularity" that adds a dimension of credit risk should demand for AI products fail to materialize.forbes

The debt surge is already visible in bond markets. During the first five months of 2026, Google, Amazon, Meta, Microsoft, and Oracle issued $159 billion in debt — 47% more than all of 2025 and exceeding the combined total raised from 2020 through 2024. Moody's stopped short of predicting imminent downgrades but noted that "heavy spending relative to revenue will lead to declining free cash flow" and could "hurt leverage, to the extent these are debt-financed".facebook+1

The warnings arrive as Oracle's credit default swap spreads recently hit their widest level since 2008, underscoring that bond investors are already pricing in elevated risk across the sector.youtube