Google, Meta and the AI ‘hyperscalers’ are on a $1 trillion borrowing binge after years of printing cash. Here’s why Big Tech’s pivot to debt matters
View original at finance.yahoo.comGoogle, Meta and the AI ‘hyperscalers’ are on a $1 trillion borrowing binge after years of printing cash. Here’s why Big Tech’s pivot to debt matters Almost every major capital spending boom during the past 200 years has ended in bankruptcies, consolidations, and tears—but also wins for the victors…
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On-balance sheet debt as well as economic debt related to not-yet-begun leases should be on investors' radar as they think about risk
80% confidenceOracle pledged to raise $45 billion to $50 billion more this year, split between debt issuance and equity
80% confidenceAny kind of large capital expenditure cycle that we have seen over history at some point leads to the risk of overinvestment
80% confidenceThe yields for the hyperscalers' bonds are near 5%, which is attractive on its own before factoring in the strong balance sheets and corporate profitability
80% confidenceThe issue for us is the spreads are very, very tight. And as you go longer, there's not much of a yield pickup at all
80% confidenceIt's different this time, which is obviously a bit of a cliché, but for now at least, this is being approached quite prudently
80% confidenceWe are incorporating these obligations and making those adjustments, particularly given the size of the leases and their growth potential. Because ultimately, in our mind, these are commitments that they have to honor. We have to effectively view them as debt when we're reviewing the credit quality of these companies
80% confidenceYou only find out after the fact. If you start to see it ahead of time, then others see it too, and investment starts to slow down on its own
80% confidenceIn an asset-light model, you tend to have higher equity multiples, and in an asset-rich model, you have multiples that are a little lower
80% confidenceThe NC pension system expects the wave of issuances to be well absorbed in 2026, much like it was in 2025
80% confidenceThe fact that investors are comfortable taking down 30-and 40-year debt, in some cases 100-year debt, certainly suggests that investors are very comfortable that this is a balanced risk-reward opportunity
80% confidenceThere may be some form of over investment over the next two years that leads to a correction or a growth slowdown
80% confidenceEvery company will be quite different. There will be winners and losers in this environment
80% confidence