AI’s Dark Side: Big Tech’s Dangerous Credit Bubble Explained

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In my previous video, I broke down why the coming AI correction will look very different from the dot-com crash. Today, we go deeper into a seismic shift that’s quietly reshaping global finance: the AI debt wave now sweeping through U.S. and European credit markets.

For over a decade, Big Tech dominated with cash-rich balance sheets. But that era is ending. Companies like Alphabet, Meta, Amazon, Microsoft, and Oracle are issuing record levels of corporate bonds to fund massive AI infrastructure build-outs. Alphabet raised more than $17B in the U.S. and €6.5B in Europe. Meta sold $30B—with a historic $125B orderbook. Oracle added another $18B to fuel data-center expansion.

Wall Street warns this is only the beginning. Morgan Stanley estimates AI ambitions could trigger $1.5 trillion in new tech-sector debt by 2028. JPMorgan projects hyperscalers will spend $570B on capex by 2026, more than four times their levels from just a few years ago.

This unprecedented supply is straining credit markets. Analysts warn of “supply indigestion,” as investors struggle to absorb continuous mega-deals. And it’s not just Big Tech—lower-rated companies, smaller cloud providers, and even former bitcoin miners turned AI-hosting firms are leveraging up, hoping to cash in on the boom.

But here’s the problem: 95% of companies using generative AI report no meaningful ROI (MIT). And derivatives tied to potential tech-sector defaults are rising—signaling growing concern about refinancing risk, especially if interest rates climb or earnings weaken.

Governments are still pouring money into AI for strategic and geopolitical reasons, helping fuel demand for these bonds. Yet the underlying tension is growing: the world’s strongest companies are issuing debt at a scale we haven’t seen in decades… without producing the returns that typically justify it.

So the real question becomes:
Is the AI revolution being built on sustainable foundations—or are we witnessing the formation of the next global credit bubble?

Watch the full analysis to understand how this debt wave could shape the future of the U.S. economy, Europe’s capital markets, and the global tech ecosystem.

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