A surge in artificial intelligence investments is pushing technology companies worldwide to issue unprecedented levels of debt, as they compete to stay ahead in the AI arms race.
Data from Dealogic shows that tech companies globally have issued $428.3 billion in bonds in 2025 through the first week of December. U.S. firms accounted for $341.8 billion, while European and Asian companies issued $49.1 billion and $33 billion, respectively.
President of Portia Capital Management, Michelle Connell, noted that this debt-fueled AI spending reflects a structural shift in the sector. “Rapid technological obsolescence and the short lifespan of chips and hardware mean companies must continuously reinvest. Debt provides a flexible means to fund this relentless innovation”, she said.
A Reuters analysis of more than 1,000 tech firms with market capitalizations of at least $1 billion shows that the median debt-to-EBITDA ratio rose to 0.4 by the end of September, nearly double the level seen during the 2020 tech debt surge. Meanwhile, the median operating cash flow-to-total-debt ratio fell to a five-year low of 12.3% in the second quarter before improving slightly later in the year.
Analysts caution that while borrowing accelerates AI development and competitive advantage, it also increases financial risk if interest rates rise or AI investments fail to deliver expected returns.
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