Global credit markets showed signs of unease as investors voiced concerns about the rapid borrowing spree among technology companies racing to build AI infrastructure. Funds reported that investment-grade bonds are becoming less attractive as issuance climbs, with some investors saying valuations look increasingly stretched. The fear is that companies are taking on too much debt too quickly in hopes of capturing AI growth.

Analysts note that while AI investment remains robust, the financing behind it is becoming riskier. Some companies with weaker balance sheets are issuing debt at aggressive levels, counting on future revenue that may take years to materialize. This raises red flags in a market already on alert after recent private-credit turbulence and shifting interest-rate expectations.

The caution has already impacted portfolio decisions, with major fund managers trimming exposure to highly leveraged issuers. They say corporate debt tied to long-term AI bets may be more vulnerable if economic conditions worsen or technology spending slows. This shift could lead to wider spreads in coming months.

Beyond tech, other sectors could also feel the impact. If credit conditions tighten, borrowing costs for non-technology companies may rise, forcing businesses to reconsider expansion plans or delay new investments. This could dampen global business activity in 2026 if trends continue.

Experts say the next six months will be critical to determining whether debt-funded AI expansion is sustainable or a brewing risk. Markets will be watching earnings closely to see which companies can convert heavy investment into reliable revenue growth.

Source: Reuters.