Original author: Xu Chao
Source: Wall Street Journal
U.S. tech giants are extending their fundraising reach into the euro bond market, and the resulting surge in bond supply is placing new pressure on the European credit market.
Meta is planning its first-ever euro-denominated bond issuance as part of a cross-border financing program of at least $20 billion; meanwhile, Google is advancing a €6 billion bond offering that must provide investors with significantly higher yields than those offered in similar deals earlier this year to complete its placement. The surge in supply from major tech companies is fueling growing concerns that borrowing costs for European corporations—and even sovereign issuers—could come under pressure.
This trend reflects the profound impact of the AI infrastructure build-out on global capital markets. Morgan Stanley CEO Ted Pick stated that capital expenditures in the AI sector could reach $10 trillion to $15 trillion, while warning that this momentum poses a risk of "crowding out demand for non-AI quality companies."
The wave of tech lending is sweeping across Europe
According to Bloomberg, citing informed sources, Meta is considering issuing a cross-border dual-currency bond, with dollar-denominated bonds ranging from 5 to 30 years and euro-denominated bonds extending from over 4 years to over 38 years. The company has engaged Citigroup and Morgan Stanley to hold investor calls on Monday and Tuesday to gauge demand. The issuance has not yet been finalized, and the final size may be expanded further based on subscription interest.
Previously, Meta met with investors in Europe last month through a non-deal roadshow to lay the groundwork for its entry into the euro bond market. This move follows Google and Amazon in diversifying its funding currency sources from a single dollar to multiple currencies. Meanwhile, Oracle also raised $10 billion in the dollar bond market at a relatively high new-issue premium to attract buyers willing to take on the risk.
Behind the surge of U.S. tech companies entering the European market is the massive funding demand driven by AI infrastructure development. Meta’s recent bond issuance is just one component of its multifaceted fundraising efforts—according to Bloomberg, the company completed a $25 billion common stock offering last week, raised $12.5 billion through preferred stock issuance, and plans to raise up to $60 billion through an at-the-market (ATM) equity program.
Supply pressure has pushed up the yield premium.
Supply pressures in the euro bond market have already been priced in. Google’s recent €6 billion bond issuance must offer investors a significantly higher yield compared to similar transactions at the beginning of the year, highlighting that the marginal cost of absorbing large-scale tech bond supply is rising.
In contrast, Meta last entered the high-grade bond market in April this year, issuing $25 billion in bonds with peak subscription demand reaching $96 billion, generating a strong market response. The markedly different subscription environment then versus now reflects a clear shift in market sentiment.
Some European issuers have responded to this. According to Reuters, as tech giants continue to dominate the bond market, some European corporate issuers are shifting toward shorter-term bonds to avoid potential supply pressures pushing up long-term yields.
The divide between Wall Street and asset management firms is deepening.
The sustainability of the AI debt wave is becoming a public point of contention between Wall Street bank executives and large asset management firms.
In David Solomon’s view at Goldman Sachs, the AI-driven technological supercycle will dominate the capital markets; despite inevitable short-term volatility, “capital markets remain open, and investors continue to focus on the growth trajectory of AI demand and computing power demand.” Blackstone President Jon Gray also holds a cautiously optimistic view, suggesting that the current divergence in sentiment “may be healthy,” but the overall AI trend points to increased investment and greater capital needs.
Asset managers, meanwhile, have been significantly more cautious. Emmanuel Roman, CEO of Pimco, said at the same summit, "At some point, a downturn will occur, and things will break," pointing to potential triggers such as rising U.S. interest rates, conflicts in the Middle East, or even a crisis in the eurozone. According to Bloomberg, citing people familiar with the matter, Pimco previously avoided losses from the decline in AI bond prices through a series of timely position reductions and interest rate hedges.
Franklin Templeton CEO Jenny Johnson bluntly stated that the AI investment cycle may have been overextended: "We are at the stage of asking whether we've gone too far"—she particularly highlighted that ultra-large tech platforms are rapidly shifting from capital-light models to capital-intensive investments, which is the most critical structural risk today.
Returns前景不明，市场情绪降温
The tech giants' debt-fueled bets, combined with the highly uncertain returns on AI spending, are creating clear fractures in market sentiment. The cost of credit protection for several U.S. tech companies' debt has risen to record highs, and some AI-related stocks have experienced significant pullbacks.
Bain Capital Chairman John Connaughton noted that "bubbles do burst," and current valuations in the AI sector are already very high, with the key question being whether corresponding returns can be achieved. Howard Marks, Co-Chairman of Oaktree Capital Management, recently stated that signs of "emerging skepticism" are appearing in AI and has classified it as a current "crowded trade."
Pimco's experience is instructive. The firm participated in the AI debt market on a scale of billions of dollars in 2025, helping to fuel the bond rally, but subsequently exited at the right time through a series of position reductions, locking in profits before bond prices declined and the market faced a large supply shock.