This article first appeared on GuruFocus.
Bank of America (NYSE:BAC) has raised its 2026 forecast for investment-grade bond issuance by hyperscalers by 25% to $175 billion, signaling that the AI funding cycle may be expanding faster than previously expected. The revision follows Amazon.com Inc.’s (NASDAQ:AMZN) $54 billion multi-currency bond deal tied to its OpenAI investment, which was not included in earlier estimates. Analysts now expect around $65 billion of additional issuance through the rest of the year, a level that could be supportive for credit spreads if a significant portion of supply is already behind the market.
So far, hyperscalers have issued about $110 billion of investment-grade debt in 2026, representing roughly 63% of Bank of America’s updated forecast. The pipeline remains active, with expectations for approximately $30 billion from Meta Platforms Inc. (NASDAQ:META), $20 billion from Microsoft Corp. (NASDAQ:MSFT), and $15 billion from Alphabet Inc. (NASDAQ:GOOG). Around a quarter of total issuance is projected to be denominated in foreign currencies, reflecting broader global funding strategies. Amazon’s recent transaction also drew strong demand, with US orders reportedly reaching $126 billion, highlighting continued investor appetite despite the growing size of supply.
The broader backdrop points to an aggressive expansion in AI-related capital spending. Hyperscaler investment in data centers is expected to increase by about 70% year over year to more than $600 billion, raising questions about how sustainable this pace may be over time. With capital expenditure now catching up to pre-capex cash flow following shareholder returns, further increases in spending guidance could translate directly into higher borrowing needs. At the same time, signals from Oracle Corp. (NYSE:ORCL) around separating future spending requirements may indicate that issuance trends could extend beyond 2026, keeping credit markets closely tied to the trajectory of AI infrastructure investment.
