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The AI boom is now being paid for with debt

Alphabet’s long-term debt went from $46.5B to $125.1B in nine months.

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The numbers

  1. Alphabet, long-term debt

    2.7x in nine months

    31 Dec 2025$46.5Blong-term debt
    30 Sep 2026$125.1Blong-term debt

    Source: Alphabet Form 10-Q, Q3 2026

  2. US hyperscalers, 2026 to 20 Aug$219B

    of investment-grade dollar bonds issued.

    Plus about $62B more in other currencies.

    Source: J.P. Morgan Asset Management, 20 Aug 2026

  3. Hyperscalers’ share of US investment-grade bond issuance

    From a rounding error to a real slice

    2022 to 2024~2%of issuance
    2026, expected~9%of issuance

    Source: J.P. Morgan Asset Management, 20 Aug 2026

  4. S&P Global on Meta, 30 Oct 2026$71B

    forecast free operating cash flow deficit for 2027.

    $39B for 2026. Outlook cut to negative. Meta disputes S&P’s view.

    Source: Reuters, 30 Oct 2026

  5. The IMF, on AI-related market corrections
    “Corrections could be amplified by rising leverage and concentrated exposures.”IMF Global Financial Stability Report

    Source: IMF GFSR, 13 Oct 2026

  6. The other side

    Big borrowers, strong borrowers

    J.P. Morgan says no single hyperscaler is more than 1.5% of the US investment-grade index, and expects the market to absorb the supply.

    Alphabet’s operations still brought in $42.3B in one quarter.

    Source: J.P. Morgan AM, 20 Aug 2026; Alphabet Q3 2026 release

Debt changes the mood

  1. Borrowed money wants a return. Expect harder questions on AI features that don’t earn.
  2. Don’t hard-wire one price. Vendor prices can move. Keep them out of your margins’ foundations.
  3. Stay portable. Keep your prompts and evals able to switch models.

Sources

  1. Alphabet Form 10-Q, quarter to 30 Sep 2026, Oct 2026
  2. J.P. Morgan Asset Management, Hyperscalers: now also a credit story, 20 Aug 2026
  3. Reuters, S&P revises Meta outlook to negative, 30 Oct 2026
  4. IMF Global Financial Stability Report, October 2026, 13 Oct 2026

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