Nothing says “the future” like mortgaging it…

In case you needed even more proof that AI spending has hit “wtf is going on” status… all you got to do is take one look at the bond market. U.S. companies have now issued more than $200 billion in bonds this year tied to AI projects… which shows companies aren’t just spending money on AI, a lot of that is being put on the credit card.

If you’re not super familiar with the bond market, because you’re one of the “stonks only go up” people… that’s fine. To dumb it down, the bond market is basically where corporations go to take out very fancy loans. They sell IOUs (bonds) to investors, promising to pay back later with interest. Usually, it’s how industrial companies fund factories or utilities to build power grids. Not how trillion-dollar tech firms pay for their AI toys (that won’t see a profit until Jojo Siwa is President).

Leading the borrowing binge is Meta (shocker), which just unloaded $30 billion in bonds this week. Investors lost their minds… they threw $125 billion in orders at the deal, making it the most oversubscribed corporate bond sale in U.S. history. Translation: Zuck said “AI,” and Wall Street tripped over itself to hand him a blank check.

(Source: Financial Times)

The wild part is these aren’t broke startups trying to fund their first chip lab. These are trillion-dollar titans (Meta, Oracle, Alphabet) who could technically pay cash. But with data centers costing almost as much as a national debt payment, they’re all deciding to borrow instead… because, well, why not?

It’s a weird look for companies that used to treat debt like Elon Musk treats condoms. These are the same folks who once bragged about pristine balance sheets and “emergency funds” big enough to make Dave Ramsey proud. Now they’re mortgaging the farm to build AI bunkers that might be obsolete before they turn a profit. And it’s not exactly comforting when analysts start calling these facilities “rapidly depreciating assets.”

Here’s where things could get worrisome. If the returns from AI don’t start rolling in soon, we could be looking at a full blown credit crisis. The companies issuing this debt are using the promise of AI as collateral for massive loans. If those data centers underperform or become outdated, the bondholders (pension funds, insurers, your 401(k)) could end up holding IOUs backed by assets that no longer generate meaningful cash flow.

And like any good financial mess, it wouldn’t stop there. The banks that helped fund these AI dreams would start pulling back. Corporate borrowing would tighten. Suddenly, startups, manufacturers, and even energy companies would struggle to raise capital. The so-called “AI-fueled growth story” would morph into a liquidity crunch… the kind that ends with even the most bullish Fox Business anchors using words like “contagion” and “we’re cooked.”

Look, I’m not trying to sound like one of those “the world is ending, buy gold” people, but it’s worth saying out loud: this pace of debt-fueled AI spending can’t go on forever. We need to see some sort of $ out of this, and sooner than later.

At the time of publishing this article, Stocks.News holds positions in Meta and Google as mentioned in the article.