AI boom enters Europe’s bond market: will Amazon and Alphabet raise funding costs for companies?

The amount of capital required to build artificial intelligence infrastructure is becoming so large that even the world’s most profitable technology companies can no longer rely solely on their own cash flows. Projected capital expenditure by Alphabet, Amazon, Meta, Microsoft and Oracle exceeds USD 1 trillion by 2028. As a result, an increasing share of this funding is being raised in bond markets — including in euros.

Why is US Big Tech borrowing in euros?

The euro area bond market allows technology companies to diversify their funding sources, reach new investors and, under certain conditions, borrow more cheaply than in US dollars. The euro already accounts for almost 10% of the outstanding bonds issued by the five major US AI and cloud infrastructure companies.

According to the European Central Bank, these companies now have approximately €40 billion in euro-denominated bonds outstanding. Amazon and Alphabet became the largest non-financial corporate bond issuers in the euro area market in 2026, while US technology giants already represent almost 10% of new euro-denominated bond issuance by non-financial corporations.

Are European companies already being crowded out?

For now, the answer is no. The ECB’s analysis shows that demand for bonds issued by euro area companies remained strong in 2026. However, some issuers reportedly avoided offering bonds on the same days as major US technology companies. This suggests that competition for investor attention is already affecting issuance schedules.

Investors have also started demanding greater risk compensation for Big Tech debt. This reflects expectations of further issuance, the long maturities of these bonds and uncertainty about how much revenue AI investments will ultimately generate.

How could Big Tech make capital more expensive?

• Greater bond supply: issuers may have to offer higher yields to attract sufficient investor demand.
• Limited investor capacity: pension funds, insurers and other investors may sell existing bonds to make room for technology company debt.
• Bond index mechanics: as Big Tech gains weight in benchmark indices, passive funds will be required to allocate more capital to these companies.

What does this mean for European and Latvian companies?

The direct impact would initially be felt by large companies that issue bonds themselves. For smaller Latvian businesses, any effect would probably be indirect: higher market interest rates and risk premiums could eventually influence bank funding costs and investor requirements.

There is currently no basis for claiming that the AI boom has already made financing more expensive for all European companies. However, if Big Tech borrowing continues to grow by hundreds of billions, euro area companies will increasingly have to compete for capital with the world’s largest and financially strongest technology corporations.

Source: European Central Bank — “Big tech, big debt”.