“Total AI-linked debt issuance, the numbers come from Bank of America: in 2025 it was nearly $400 billion. This year it's going to be about $655 billion. And next year's forecast is $1 trillion. … Those debt payments are due whether or not the AI investments are paying off. So it leaves less room for mistakes, and it makes any kind of slowdown more painful.”
Prof G Markets · Money & Markets · November 2026
Context
Asked why tech stocks are selling off, Bosa says the difference from earlier AI scares is that hyperscalers with strong balance sheets, not just neoclouds, are now borrowing to fund the build-out. She is citing Bank of America debt-issuance figures.
Transcript
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…in market value since the beginning of October. This has been a pretty dreadful month and certainly week for practically every name in tech right now, even the companies that seem to report decent-ish earnings. I guess let's just start with your overall reaction. What is going on right now?
It isn't like we haven't been here before. Earlier on in the generative AI cycle, markets have become anxious. They've started to think, okay, we are spending all of this money, hundreds of billions of dollars, trillions even on this AI build out. But where is the return on investment, right? Like, when is this AI spending going to pay off? And I think we're in another one of these moments. But at the same time, what's different this time than maybe what we saw a year ago or in the past is that the balance sheets of some of the healthiest, safest companies in the world are changing. So, something that I look at and pay really close attention to is how much debt is being issued now, right? And this was sort of a neo-cloud thing that's been happening over the last few years. Neo-Clouds are, you know, the companies that are serving GPUs and AI infrastructure to other companies. But of course, you have the hyperscalers as well. Right, which is Amazon, Google, and Microsoft. They have typically had essentially fortresses as balance sheets, right? They have a huge amount of free cash flow and they've been able to fund their build out, but…
And it seems as though, I mean, just looking at some of these names, like Google, negative free cash flow, Amazon, negative free cash flow, Meta, negative free cash flow. I mean, the only hyperscaler that isn't negative on a free cash flow basis right now is Microsoft. But even for Microsoft, the…
I mean, that is, it's an interesting question, right? Because you look at the bottlenecks in AI and you think about power, right? That is a constraint. Chips are a constraint, but capital is increasingly a constraint when you're trying to fund this enormous build out. And you're right, that only…
Yeah, and this seems to be part of the crazy thing about this moment in time. Is that everything, the entire market is, and your expectations around this market are based on projections that are way out in the future that actually no one can say with any real certainty, which means massive upside…
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