Morgan Stanley sees AI bond issuance hitting $570B this year, topping $1T in 2027

Investment bank Morgan Stanley projects that AI companies will issue $570 billion worth of bonds on global markets this year.

Citing Morgan Stanley's analysis, Reuters reported Wednesday that AI-related bond issuance had already reached roughly $236 billion through the end of last month — four times the volume recorded in the same period last year. The bank said hyperscalers operating large-scale data centers, including Alphabet (Google's parent company), Amazon and Microsoft, have been ramping up bond issuance to fund their investments.

Investment by hyperscalers is expected to accelerate further in the second half of this year.

Morgan Stanley put total annual investment at $700 billion this year and forecast that figure will surpass $1 trillion next year.

"Hyperscalers are broadening their investor base by issuing bonds in non-dollar currencies," the bank said. "While underlying economic fundamentals remain strong, bond prices are currently being driven primarily by the supply outlook."

Fundraising by chipmakers is also rattling the market. Chipmakers, which raise capital mainly through equity and private markets, are shifting away from long-term financing toward shorter-term arrangements. Morgan Stanley said chipmakers are increasingly structuring their fundraising so that principal is repaid in annual or quarterly installments.