How Big Tech’s Bond Spree and Rising US Debt Are Creating Risks and Opportunities

Is a global debt emergency on the horizon?

Why it matters: Big Tech’s bond-issuing spree is helping to pay for its massive artificial intelligence buildout. And it’s not expected to slow down this year. Meanwhile, the US federal deficit has swelled to about $39 trillion, according to the US Treasury Department. That’s raising red flags about the potential impact on the Treasuries market. Government and corporate debt are growing but for different reasons. How should investors think about it?

Dominic Pappalardo is the chief multi-asset strategist for Morningstar Wealth. It’s part of registered investment advisor, Morningstar Investment Management.

8 Questions on AI Borrowing Boom and US Debt

1. Big Tech is issuing hundreds of billions of dollars of bonds to spend on building data centers and other AI infrastructure. Can you talk about the biggest deals?
2. Alphabet issued a rare 100-year bond earlier this year. Tech firms typically don’t do this, right? What signal does that send?
3. Let’s pivot to US government debt. What’s driving the nation’s deficit higher? And is it sustainable?
4. Former US Treasury Secretary Henry Paulson and JPMorgan Chase CEO Jamie Dimon have suggested that lawmakers prepare for an emergency. How have their messages been received?
5. What, if any, are key distinctions between government and corporate debt? And why do you believe concerns fluctuate about the two?
6. What risks do you think are potentially lurking that could cause a crisis in the bond market?
7. How should investors think about the bonds in their portfolio, and does the spike in issuance present any potential opportunities?
8. What’s the takeaway as the US debt balloons and Big Tech’s bond binge continues?

Key Quote on Big Tech’s Bond Binge

I think the higher income that these bonds are offering is appealing for those investors…. The concerns I have is that the makeup of the bond market is changing. So the massive amount of supply coming from these tech companies is starting to dominate their share of the marketplace.

It’s not unlike what we saw in the S&P 500 last year where the Mag Seven or top 10, however you want to divide it, was almost 40% of the index. What’s happening on the bond market side is AI debt is now about 15% of the corporate bond universe. That’s very high.

The Takeaway: The US federal deficit needs to be addressed at some point. However, the debt is not necessarily a bad thing, according to Pappalardo. If the government efficiently reinvests the money it’s borrowing back into the economy, then that could help the GDP grow. Residents could do better, and tax revenues could go up. The federal government could service the debt with less pain. The story is sort of similar to leading artificial intelligence firms issuing big bond deals, says Morningstar Wealth’s chief multi-asset strategist. Those firms need to ensure the revenue streams and investments from data centers and other AI infrastructure profitably pay off during the bonds’ lifetime.

More From Morningstar on Bond Market Concerns and Recent Performance

Calls from high-profile leaders for US lawmakers to address a potential bond market crisis are facing a timing mismatch. Pappalardo says the US debt is a very long-term problem. Elected politicians’ terms in office are relatively short in nature. They may not want to make unpopular and difficult decisions if they are seeking reelection or won’t be in office when the debt is due.

Read about which bond funds suffered and delivered during a turbulent first quarter of 2026. Morningstar’s Paul Olmsted writes about how new bond-fund categories reveal income opportunities and highlights three highly rated funds. Watch two manager research analysts discuss on Investing Insights why bond funds benefit from active management. And bookmark Morningstar’s Guide to Fixed-Income Investing.

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