American tech giants crowd out European bond buyers

US technology companies are issuing record amounts of debt to fund artificial intelligence infrastructure, directly competing with European entities for limited capital.

Amazon, Alphabet, Meta, and Oracle have sold approximately $250 billion in dollar-denominated bonds and €37 billion in euros since the start of 2025. Microsoft recently joined this trend with a $25 billion dollar-only issuance. These figures come from filings reviewed by AI Industry Reviews, an independent platform that tracks AI tools.

Goldman Sachs projects that new AI hyperscaler bond sales will reach $420 billion next year, with ING estimating that about €60 billion of that total will be issued in euros. This volume of issuance creates direct competition for fixed income funds within the corporate sector and between corporations and governments.

European sovereigns are already feeling the pressure. Yields on French 10-year bonds rose from roughly 3.7% to nearly 5% over the past six months. With public debt at 119% of GDP and a deficit above 5%, France faces an interest bill that will rise from €79 billion to €91 billion next year, exceeding €100 billion by 2028. The Finance Ministry must identify tens of billions of euros in cuts, tax hikes, or further borrowing to cover this increase by the end of the decade.

Economists at the European Central Bank noted in August that the market is adapting but warned that concentrated debt inflows could make it harder for other sectors to access finance. Viktor Hjort, global head of credit strategy at BNP Paribas, described the current situation as bond abundance, stating that hyperscaler activity is high enough to create competition for available funds. He noted that yields jumped last month due to energy prices and French political instability, revealing rising costs for both government and company borrowing.

Corporate earnings in Europe are also showing signs of strain. Goldman Sachs found that interest costs as a share of sales for firms in the Stoxx 600 index have risen by nearly half since 2022, cutting earnings by more than 5%. A January study for the OECD found that borrowing costs for cities and regions rise in European countries where AI job vacancies are growing, a trend that contrasts with findings in the United States where AI investment is linked to lower municipal borrowing costs.

Christos Makridis, co-author of the OECD study and a professor at Arizona State University, told Deutsche Welle that the opposite dynamic holds in several European countries compared to the US. Additional billions in new AI bonds are planned for next year, which could add further pressure to the continent's fiscal landscape. European taxpayers may ultimately pay more on government debt to help finance an AI boom located across the Atlantic.