This article first appeared on GuruFocus.
Goldman Sachs is turning more cautious on debt issued by the biggest AI hyperscalers as massive infrastructure spending drives a flood of new corporate borrowing. The call is not a rejection of the AI investment thesis, but a warning that relentless bond issuance could pressure valuations across Big Tech credit even if the underlying businesses remain strong.
We believe there will be a lot of hyperscaler issuance, Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, told Bloomberg TV. For that sector at large we are underweight knowing more issuance will come.
Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Oracle (NYSE:ORCL) have been ramping capital spending to finance data centers, chips, power and other AI infrastructure.
That has pushed several Big Tech companies deeper into the corporate bond market.
That is what we have seen all year long, Rosner said. New issuance is replacing existing issuance.
The important distinction is that Goldman’s underweight call is primarily about supply.
Rosner said her team still believes in the story of AI, but expects continued borrowing to reprice parts of the credit market as investors absorb larger volumes of new debt.
That matters because the AI buildout is becoming more capital intensive. Hyperscalers have increasingly leaned on debt as free cash flow comes under pressure from enormous capital expenditure programs.
The scale could keep growing. Brookings Institution research cited in the report estimates U.S. AI infrastructure could require roughly $10.3 trillion of investment through 2032, with more financial risk potentially moving away from Big Tech balance sheets and into less-transparent financing structures.
Investor takeaway
For investors, Goldman’s warning is more about financing conditions than the long-term AI demand story.
Heavy issuance can push bond spreads wider and raise borrowing costs even when credit quality remains solid.
Investors should watch hyperscaler bond supply, credit spreads, free cash flow, capex intensity and interest expense.
If AI monetization grows quickly enough, today’s debt load may remain manageable.
But if borrowing continues faster than cash generation improves, the cost of funding the AI boom could become a larger part of the valuation debate across Big Tech.