AI giants enter Europe's bond market, competing with states for capital

Race for capital on the bond market

Amid investments exceeding $1 trillion (€900 billion) in artificial intelligence infrastructure, American technology giants have begun borrowing massively on the debt market, thereby competing with European governments and companies for the same pool of investor funds. According to calculations by the AI Industry Reviews platform based on US regulatory filings, four of the 'Big Five' — Amazon, Alphabet (Google's parent company), Meta, and Oracle — have issued approximately $250 billion in dollar-denominated bonds and an additional €37 billion ($41 billion) in euro-denominated bonds since the beginning of 2025. Microsoft was the latest to join the borrowing spree, issuing $25 billion in bonds. This is reported by Deutsche Welle citing these data.

2026 forecasts

According to Goldman Sachs' forecast, total new bond issuances by AI hyper-scalers will reach $420 billion next year, with approximately €60 billion denominated in euros, as estimated by the Dutch bank ING. For the European market, this signifies a further increase in debt supply. Viktor Hjort, head of credit market strategy at BNP Paribas, described the phenomenon as an 'abundance of bonds' and noted that the presence of hyper-scalers in the euro market is already 'sufficiently high to create competition' — both within the corporate sector and between companies and states for funds from fixed-income portfolios.

Pressure on France's public finances

France is particularly vulnerable: with public debt at 119% of GDP and a deficit exceeding 5%, the country is already paying a significant risk premium. Over the past six months, yields on French 10-year bonds have risen from approximately 3.7% to nearly 5%. Debt servicing costs are projected to increase from €79 billion currently to €91 billion next year and over €100 billion by 2028, forcing the finance ministry to seek tens of billions of euros through spending cuts, tax increases, or new borrowing before the end of the decade. Germany and Italy are also under pressure, with their government bond yields rising sharply in recent months.

ECB warnings and consequences for companies and regions

In August, economists at the European Central Bank wrote that the eurobond market is still adapting to the emergence of AI giants but warned that they 'could hinder access to financing for other companies and sectors' and also acknowledged 'possible spillover' into the sovereign and supranational bond segments — meaning higher borrowing costs for both governments and institutions such as the European Union and the European Investment Bank. Goldman Sachs, for its part, noted that interest expenses for companies in the Stoxx 600 index have nearly doubled relative to revenue since 2022 and have reduced their profits by more than 5% over the same period. At the city and regional level, a study for the OECDpublished in January, identified rising borrowing costs in Belgium, Germany, Spain, and Sweden in areas where AI adoption was fastest — unlike in the US, where, according to study co-author Christos Makridis from Arizona State University, the relationship is reversed.

What is confirmed and what is not

The publication itself clarifies: AI bonds are far from the sole cause of rising budgetary pressures in Europe. Last month, yields surged again amid rising energy prices linked to the conflict surrounding Iran and the political crisis in France. Hjort interpreted the simultaneous increase in borrowing costs for governments and companies as a sign of intensifying competition for capital. Thus, the scale of future issuances remains a bank forecast rather than an established fact, and the contribution of AI debt to rising yields has not yet been separated from other factors. If the plans materialize, additional pressure on borrowing costs in Europe will continue into next year.