During a sensitive period, the market was severely impacted. Amazon issued bonds worth $15 billion, and the "Big Four" issued over $80 billion in bonds in two months. Bank of America stated that "the best trade next year is to short the bonds of cloud giants."

The "arms race" for AI infrastructure investments by tech giants is transmitting pressure to the capital markets through an unprecedented wave of bond issuance. According to media reports, Amazon launched its first dollar bond issuance in three years on Monday, raising $15 billion, which is $3 billion higher than the initial estimate. This issuance attracted peak demand of about $80 billion, demonstrating the market's enthusiasm for this tech giant. This also means that Amazon has joined the ranks of its peers, including Google's parent company Alphabet, Meta, and Oracle, in funding massive capital expenditures related to AI through large-scale bond issuance. In just the past two months, the total bond issuance by the four major tech giants has exceeded $80 billion. This AI-driven debt expansion is reshaping the supply and demand dynamics of the corporate bond market on one hand, while also raising alarms on Wall Street. Bank of America has warned that the loose financial environment supporting this wave of AI enthusiasm is reaching a turning point, as the pace of interest rate cuts by global central banks slows, cracks in the credit market have begun to show, and shorting the bonds of these cloud service giants could become the "best trade" of 2026. Amazon Increases Investment, Capital Expenditures Surge According to media reports, Amazon stated in an email response that the proceeds from this issuance will be used to "support business investments, fund future capital expenditures, and repay upcoming debt." Goldman Sachs, JP Morgan, and Morgan Stanley are the lead underwriters for this issuance. As the world's largest cloud service provider, Amazon Web Services (AWS) is a core participant in this wave of AI investment. To meet the surge in demand for AI services, Amazon is significantly expanding its infrastructure investments. Data shows that the company's capital expenditures in the third quarter of 2025 are expected to soar 61% year-on-year to $34.2 billion, bringing its total expenditures for the year to $89.9 billion. According to analysts' average expectations compiled by Bloomberg, Amazon's capital expenditures next year are expected to exceed $147 billion, nearly three times the level of 2023. In a recent earnings call, CEO Andy Jassy revealed that since 2022, Amazon's data center computing power has doubled and is planned to double again by 2027. Earlier this month, Amazon also signed a $38 billion agreement with OpenAI to provide computing power support with hundreds of thousands of Nvidia chips over seven years. AI Arms Race Triggers Trillion-Dollar Bond Issuance Wave To gain a leading position in the AI field, tech giants are engaged in an expensive competition, centered around building data centers capable of supporting AI model training and operation. In recent months, they have increasingly turned to the debt market rather than using cash reserves to fund these large construction projects. Before Amazon's bond issuance, Google's parent company Alphabet had issued $25 billion in bonds earlier this month; social media giant Meta issued $30 billion in bonds in October, setting the record for the largest corporate bond issuance this year; and Oracle raised $18 billion through bond issuance in September The scale of this bond issuance wave is unprecedented. According to reports, U.S. companies have issued more than $200 billion in bonds this year for AI-related infrastructure projects. Goldman Sachs previously estimated that the "huge" bond sales by tech giants accounted for more than a quarter of the net supply of corporate bonds in the U.S. this year. This bond issuance frenzy driven by AI is having a direct impact on the market. Analysts warn that the potential financing needs of tech giants amounting to hundreds of billions of dollars could "drown" the debt market, bringing new risks to credit investors. Robert Tipp, head of global bonds at PGIM, pointed out that the sudden surge in supply is putting pressure on the market and could significantly push up the yields on long-term bonds. According to JP Morgan's forecast, this wave is expected to drive U.S. corporate bond issuance to a record $1.8 trillion next year. Bank of America: Shorting cloud giants' bonds may be the "best trade of 2026" Wall Street Journal previously mentioned that despite strong market demand, Bank of America strategist Michael Hartnett believes that the surge in AI-related debt is sowing the seeds of risk. His core bearish logic is based on changes in financial conditions: over the past 12 months, global central banks have cut rates 167 times, creating a "massive easing" financial environment, but this momentum is weakening, and the number of rate cuts in the next 12 months is expected to plummet to 81. Hartnett noted that the main phase of the easing cycle has passed, and the peak of financial easing typically corresponds to the bottom of credit spreads. Currently, the massive capital expenditures required by the tech industry for the AI "arms race" have exceeded what cash flow can support, leading to the widening of bond spreads and credit default swaps (CDS), which he described as "trouble in the parade." For example, Oracle's CDS has recently soared above 100 basis points. Hartnett even quoted a popular market saying to emphasize his point: "When the next time the Federal Reserve implements quantitative easing (QE), you'll know they will be buying bonds from AI cloud giants." This suggests that the credit risks of these companies may ultimately require intervention from the central bank.