AI Boom Fuels a New Tech Debt Binge

• Tech's new bond issuance is a growing share of the overall debt market, driven by hyperscalers funding AI infrastructure.
• These hyperscalers are high-quality issuers with significantly lower leverage ratios, capable of adding trillions more in debt.
• The market is expected to absorb this new issuance, enabling a more sustainable AI boom due to improving ROI visibility and strong customer demand.
• Operating cash flows are currently neck-and-neck with CapEx, but CapEx is expected to decelerate, providing margin relief.

JPMorgan's Stephanie Aliaga discusses how Big Tech is increasingly using debt to finance the massive AI infrastructure buildout. She highlights that the market is capable of absorbing this high-quality issuance, which could sustain the AI boom due to improving visibility into returns. While acknowledging some risks, the outlook for continued tech debt and AI investment remains positive.