Wall Street Is Putting a Price on the AI Buildout

AI companies are paying more to borrow as investors weigh a flood of debt against uncertain returns. The cost of funding is becoming another test of the AI boom.

Technology stocks may be rallying on AI enthusiasm, but the bond market is asking a harder question: how much will it cost to fund the buildout?

Companies financing data centres, chips and other AI infrastructure are finding that lenders want more interest than they do from many traditional corporate borrowers. According to data cited by Reuters, AI-related investment-grade bonds carry an average spread of about 115 basis points above benchmark rates, compared with 78 basis points for the broader investment-grade market.

Why lenders are getting selective

Goldman Sachs expects large cloud companies to issue $420 billion of debt in 2027, 60% more than its estimate for this year. Bond buyers have to absorb that supply while judging whether expensive AI projects will generate enough revenue to justify the spending.

That creates a useful distinction for investors. A company can have a strong balance sheet and still face higher borrowing costs if it repeatedly returns to the market for funding. Those costs raise the bar its AI investments must clear to produce attractive returns.

The wider spreads do not, by themselves, signal that lenders expect the biggest technology companies to default. They show that lenders want more compensation for the scale and pace of borrowing.

The next test is whether AI revenue grows quickly enough to make that more expensive funding worthwhile.