An AI bubble? The bond market is not seeing one

BLOOMBERG

A flood of new issues alone doesn’t mean we are entering a euphoric phase. Bond traders have not lost their cool yet.

Here is one data point: At the beginning of the year, blue-chip tech companies were able to sell bonds more cheaply than their peers. This is no longer the case, a recognition perhaps that billions of dollars of new supplies will be hitting the pipeline.

According to Morgan Stanley, a whopping $2.9 trillion will be spent on data centers through 2028. Big Tech can only pay for roughly half of this capital expenditure with cash flows. The rest will have to be funded externally.

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