Jefferies warns big tech AI investments could raise debt risk
Jefferies is sounding the alarm as Microsoft, Amazon, Meta, and Alphabet keep ramping up their AI investments.
Alphabet just bumped its 2026 spending plans by $15 billion, aiming for a huge $195 billion to $205 billion that year.
Altogether, these tech giants are expected to spend $695 billion on capital projects in 2026, and possibly hit $870 billion by 2027.
Hyperscalers issued $194 billion in debt
With all this cash flowing into AI, Jefferies expects investors to start asking tough questions about whether the returns will really pay off, especially since more of this spending is now funded by debt instead of cash.
In fact, hyperscalers have issued $194 billion in investment-grade debt this year.
Bond yield spreads for companies like Alphabet and Amazon are widening (a sign of rising credit risk), even as demand for AI infrastructure surges: RPOs jumped 184% to about $2.1 trillion in just one year.