The AI construction boom has started paying for itself the way booms eventually do: with borrowed money. Goldman Sachs counts about $250 billion of bonds sold by the big cloud companies this year, on the way to roughly $400 billion in 2027.
For the first few years, the AI boom was paid for in cash — out of the profits of some of the best businesses ever invented. That era is ending. The checkbooks are still open, but the money in them is increasingly someone else’s.
The bond market has noticed, politely. A bond’s “spread” is the extra interest a company pays above what the U.S. government pays — the market’s price tag on risk. That extra charge on AI-company bonds widened about a quarter of a percentage point in the month through July 30. These bonds now pay about 1.2 to 1.3 points extra, against 0.8 for the average high-quality bond.
Translation: lenders still love these companies. But they have started charging for the enthusiasm.
Fifty-year promises
Look at what is actually being sold. Alphabet (GOOGL) has bonds that do not mature until 2075. Amazon (AMZN) has bonds due in 2065. Both pay about 6.5% interest. Meta Platforms (META) will pay you more than 7% on bonds due in 2065.
A 2075 bond asks a lender to predict the technology world half a century from now. The lenders of 1975, for reference, would have been financing the mainframe computer forever.
Further down the quality ladder it gets riskier. Bonds tied to specific data-center projects — ventures from Blackstone and Related among them — pay up to two extra percentage points. In the bond world, extra yield is never a gift. It is a weather report.
The analysts are saying the quiet part out loud. Barclays’ Dominique Toublan frames it as weighing what you are paid against the risk you carry. Morgan Stanley’s Vishwas Patkar notes that a bond backed by one building has an endpoint: a data center, unlike a great company, can outlive its usefulness before it outlives its mortgage.
For perspective: Microsoft (MSFT) is rated AAA — a credit grade one notch above the United States government itself. Even in this boom, quality still has a ranking, and the ranking still matters.
Mr. Buffett’s old yardstick
Now set all that borrowing beside the market it funds. The Buffett Indicator — the value of the entire U.S. stock market divided by GDP, the country’s yearly output — sits near 230%. That is above its peak in the dot-com bubble.
The honest footnote: today’s giants earn far more overseas than the companies of 1999 did. Adjust for that, as FactSet’s Sebastian Svallin does, and the number falls to about 144%. Better. Still expensive by any historical standard. The adjustment shrinks the number, not the conclusion.
The indicator’s namesake, Warren Buffett, is meanwhile sitting on roughly $400 billion of cash at Berkshire. Draw no dramatic conclusion — he has held cash through rallies before. But when the market’s most patient investor is this patient, it is worth noticing.
Here is the calm takeaway. A high starting valuation has never been a crash timer. It has been a remarkably reliable forecast of smaller returns from here. Nothing in this story says sell everything Tuesday. History says: expect less from money invested at these prices, and refuse to reach for extra yield to make up the difference.