AI-related corporate debt has sold off sharply in recent weeks, pushing 10-year hyperscaler spreads to about 121 basis points over Treasurys while the rest of the high-grade market held up better. Microsoft, Meta Platforms and Amazon report earnings on Wednesday and Thursday.
More cracks have emerged in the facade of the artificial-intelligence spending boom in July, right as more "hyperscalers" are due to report quarterly earnings. Google parent Alphabet said last week it plans to increase AI spending to between $195 billion and $205 billion for the full year, not dial it back.
Microsoft, Meta Platforms and Amazon are on deck to deliver earnings on Wednesday and Thursday. Oracle's results arrived in June and Nvidia's are due in late August; Microsoft declined to comment.
Hyperscaler spreads gap out as high-grade holds
AI-related debt has sold off sharply in recent weeks, causing spreads to gap out, as a chart from BofA Global shows, while the rest of the high-grade corporate bond market has held up better.
Specifically, 10-year AI debt from the group was trading at a spread of about 121 basis points above the Treasury rate. That compares with a high-grade corporate spread of about 80 basis points for the ICE BofA US Corporate Index, up from about 73 basis points in June.
Investors lately have punished shares of hyperscalers for footing the bill for the AI buildout, while rewarding chip and memory stocks. That has driven high volatility under the surface of the major stock indexes.
Record supply meets a cooling bid
Meanwhile, Lukasz Labedzki, a fixed-income analyst at the Franklin Templeton Institute, said on Monday that he believes issuers will become more cautious, pointing to what could be a record year for U.S. investment-grade corporate-bond issuance. More than $1.2 trillion of high-grade supply was issued in the first six months of 2026, the most since 2021, and roughly $200 billion of hyperscaler supply has been added.
But order cover ratios on AI-related corporate bonds fell from nearly 5x in February 2026 to below 2x by July 2026, according to Apollo Global Management analysis reported by Crypto Briefing.
According to MarketWatch, Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors, said: "The money has to come from somewhere."
Treasury yields carry the weight
The AI-debt supply has been pressuring Treasury yields higher too. The benchmark 10-year Treasury yield eased back slightly on Monday but was still near 4.65%. The 30-year Treasury yield has been stuck well above 5% for its longest stretch since 2007.
Moody's Ratings said last week it expects AI-related capital expenditures from the hyperscalers to reach $1 trillion next year. Joe Boyle, head of asset-class specialists at Hartford Funds, said the supply should structurally keep yields elevated, yet called many AI hyperscalers high-quality companies with other avenues besides AI that will make their debt money good.
Even so, the U.S. debt pile now pushing $39.7 trillion also pushes rates structurally higher, Boyle said.
Sources: MarketWatch, Crypto Briefing
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