Morgan Stanley forecasts that debt tied to artificial intelligence investments will more than double, reaching almost $570 billion in 2026 as major technology firms tap credit markets to fund large-scale capital spending. The brokerage points to rising bond supply and growing credit market activity as hyperscalers seek alternative financing to support AI-driven outlays.
According to Morgan Stanley's estimate, AI-related global debt issuance stood at nearly $236 billion as of May 31, 2026 - roughly four times the level recorded in the same period a year earlier. That surge reflects a shift by technology companies that historically relied on strong cash flows but are increasingly turning to debt financing as investment needs escalate.
Hyperscalers Alphabet, Amazon, Microsoft and Meta are expected to mobilize approximately $700 billion in total outlays this year, the brokerage said. Morgan Stanley also anticipates issuance will pick up pace in the second half of 2026 as hyperscaler capital expenditure trends toward a longer-term trajectory, with the firm projecting hyperscaler capex to top $1 trillion in 2027.
Morgan Stanley highlighted that these large issuers are widening their investor reach. "Hyperscalers have been broadening their investor base through non-USD issuance," the brokerage said, noting the trend toward diversifying funding sources beyond traditional dollar-denominated markets.
On market dynamics, Morgan Stanley emphasized that while underlying economic fundamentals remain solid, near-term bond pricing appears to be influenced largely by expectations around supply. "Fundamental (economic) backdrop remains strong, but for now we think (bond) price action is being mostly driven by supply expectations," the firm added.
The report also draws attention to financing trends in the semiconductor sector. Financing for chip companies - which is rising in both public and private markets - is shifting toward shorter-duration arrangements, structured so that deals are paid down fully over time. This reflects a different funding cadence than the longer-term issuance now seen in some technology balance sheets.
Overall, Morgan Stanley's outlook frames a debt market responding to rapid, concentrated capital demands tied to generative AI and related infrastructure, with implications for bond supply, investor composition and issuance timing as corporations adjust financing strategies to match scaling investment needs.