Banks, investors grow wary of AI debt after market selloff
QQQ•Banks and credit investors are scrutinizing AI-related debt more closely and showing reluctance to take on additional exposure after a market selloff erased $2.5 trillion from the Nasdaq 100. Goldman Sachs Research projects global hyperscaler debt issuance will reach $420 billion in 2027, up from its $250 billion estimate for fiscal 2026.
1. Lenders reassess exposure
Banks and credit investors have become more cautious about AI-related debt deals in recent days, with some lenders reluctant to finance additional borrowing even when major technology companies guarantee it. Investors and lenders are stress-testing cash flows against economic downturns and reviewing contractual terms, including service obligations, operational deadlines and customers’ ability to reduce or end commitments.
2. Debt demand remains high
Goldman Sachs Research projects global hyperscaler debt issuance will reach $420 billion in 2027, more than 60% above its estimate of $250 billion for fiscal 2026. The Nasdaq 100 lost $2.5 trillion in market value on Thursday, while lenders also face concerns about possible data center oversight and the concentration of AI-related loans in their portfolios.
3. Riskier borrowers face pressure
The pullback has been especially pronounced for neocloud companies and standalone data center operators. Nebius decided not to proceed with a high-yield bond issue it had explored in September, though it entered a $3.5 billion senior secured loan facility with Citigroup in October. The spread on 10-year hyperscaler debt has widened about 50 basis points year to date, compared with roughly 20 basis points for high-quality industrial companies not tied to AI.
