Castle Securities forecasts that, by 2028, U.S. technology companies will have issued over $500 billion in debt in public and private markets combined to support AI chip purchases, with chipmakers alone issuing more than $250 billion in bonds in 2028. This volume of financing will reshape the entire investment-grade credit market landscape, potentially forcing investors to reduce their allocations to the technology, media, and telecommunications sectors to free up capital for these new issuances.
Global credit markets may have already absorbed the record-breaking borrowing associated with data center construction, but U.S. tech companies’ financing needs are far from over.
Citadel Securities forecasts that, by 2028, U.S. technology companies will issue more than $500 billion in debt across public and private markets to support AI chip procurement.
Jeff Eason, Head of Investment-Grade Credit Research at the firm, warned that this scale is “unprecedented relative to today’s market,” and that the forecast may still be conservative.
The sheer size of this wave of financing is sufficient to reshape the entire investment-grade credit market landscape. Eason noted that $500 billion would represent more than 5% of the Bloomberg U.S. Investment Grade Index by then, potentially forcing investors to reduce allocations in the technology, media, and telecommunications sectors to make room for chip-financing bonds.
Chip Financing Reaches Unprecedented Scale
Global credit markets have already absorbed approximately $570 billion in AI-related debt, mostly issued by so-called hyperscale cloud providers such as Amazon, Microsoft, and Google (a subsidiary of Alphabet) to fund massive data center expansions.
Of this amount, the U.S. market alone has taken up roughly $60 billion in short-term debt since last year, with maturities of up to five years.
However, financing demand on the chip side will dwarf these figures. Eason estimates that chipmakers alone could issue more than $250 billion in debt in 2028.
“Investors have not yet experienced a funding shock of this magnitude,” Eason said.
Maturity Profiles and Issuance Methods Are Becoming Shorter-Term and More Diversified
Eason expects that the debt maturities for this round of chip financing will primarily range from three to five years, aligning with the typical useful life of the chips themselves, with some debt potentially issued via Rule 144A private placements. This structural arrangement implies that the market will need to absorb a substantial volume of supply within a relatively concentrated time window.
Leading AI companies are increasingly relying on diversified debt structures to access the investment-grade market. Earlier this year, Anthropic completed a financing arrangement worth approximately USD 35 billion to purchase custom Google TPU chips, marking one of the largest transactions in the history of private credit markets.
Broadcom provided a credit guarantee for the senior secured portion of this debt, enabling Wall Street banks to trade related tranches in the market.
OpenAI is likewise burning significant amounts of cash to sustain its business expansion and is becoming increasingly reliant on debt support and guarantee arrangements from large institutions to secure market financing.
The investment-grade credit market landscape may undergo restructuring
Citadel Securities entered the investment-grade credit market in early 2024. According to Sam Berberian, the firm’s Global Head of Credit Trading, the company’s nominal trading volume last year reached approximately USD 500 billion.
Eason and his team—including investment-grade credit analyst Tucker Roberts—believe that the large-scale influx of chip-financing bond issuance could catalyze the emergence of a new benchmark sector within the investment-grade credit market, with profound implications for credit spreads, portfolio construction, and capital allocation across the broader AI ecosystem.
“This is not just a story about financing scale,” Eason stated. “It could fundamentally reshape the composition of the investment-grade market.”
Editor/Liam