How the AI debt binge shattered hyperscalers’ ‘unspoken contract’ with investors

February 23, 2026

TL;DR

Hyperscalers are substantially increasing AI capital expenditure (capex), with UBS projecting it could exceed $770 billion in 2026.
There's a shift from funding AI capex through cash flow to utilizing credit markets, challenging the 'fortress balance sheet' status of tech giants.
This move alters an 'unspoken contract' where AI spending was considered equity risk, not a concern for credit markets.
Companies like Oracle and Alphabet have issued billions in debt, placing their debt loads under greater scrutiny.
Investors, including BlackRock and UBS, are concerned about rising corporate borrowing, its impact on bond markets, and the translation of AI adoption into future revenues and profits.
Potential risks include data centers becoming obsolete due to rapid technological improvements, impacting debtholders.
Vanguard acknowledges that while hyperscalers have strong fundamentals, they are taking on more leverage, potentially building hidden risks in the system.

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