AI borrowing spree: Why tech investors should watch the bond market

• Hyperscaler CAPEX is estimated to reach $757 billion by 2026, an 84% year-over-year increase, primarily for AI infrastructure.
• Tech giants like NVIDIA, Oracle, Meta, Amazon, and Alphabet are increasingly tapping debt markets to fund this expansion, with free cash flow at its lowest since the dot-com era.
• Tech investors are advised to monitor the bond market closely, as tech companies are becoming more like 'old economy' capital-intensive industrial businesses with volatile free cash flow.

The AI boom is driving significant capital expenditure for data centers, leading major tech companies ('hyperscalers') to increasingly rely on debt financing. This shift is depleting their cash reserves and making them more sensitive to bond market conditions, a departure from their historically immune status.