{"id":7063832,"date":"2026-09-22T08:39:36","date_gmt":"2026-09-22T08:39:36","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/legal\/ai-borrowing-goes-to-plaid\/"},"modified":"2026-09-22T08:39:36","modified_gmt":"2026-09-22T08:39:36","slug":"ai-borrowing-goes-to-plaid","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7063832","title":{"rendered":"AI Borrowing Goes to Plaid"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>An AI researcher let it slip last week that the technology we\u2019re all embracing <a href=\"https:\/\/www.bbc.com\/news\/articles\/ckgwy1k42w4o\">could wipe out humanity<\/a> in the next decade. Bright side: if that came to pass, it would render any concerns expressed in this blog post largely moot. If you wanted something else AI-related to worry about in the meantime, however, there\u2019s always the bond market to consider.<\/p>\n<p>For most of the past decade, the booksellers and metaverse builders dabbling in AI financed their hobby out of their own pockets. That era is over, as a Vanguard strategist <a href=\"https:\/\/www.nytimes.com\/2026\/08\/20\/business\/bond-yields-tech-ai-debt.html\">told the New York Times<\/a>. As these companies committed to AI (and assumed the industry label \u201chyperscalers\u201d), it became harder to self-fund all the data centers and power contracts they needed. J.P. Morgan Asset Management <a href=\"https:\/\/am.jpmorgan.com\/wr\/en\/asset-management\/institutional\/insights\/market-insights\/market-updates\/on-the-minds-of-investors\/hyperscaler-debt-issuance-ai-buildout\/\">expects<\/a> hyperscalers\u2019 operating cash flow and equity issuance to cover only about a quarter of their ongoing investment in AI. For the rest, they are hitting the bond market.<\/p>\n<p>The volume of those bonds is getting hard to fathom. Vanguard <a href=\"https:\/\/corporate.vanguard.com\/content\/corporatesite\/us\/en\/corp\/vemo\/ai-buildout-comes-to-bond-market.html\">counts<\/a> roughly $35 billion in annual debt issuance by the five largest hyperscalers from 2020-2024. In 2025, the figure hit $93 billion. Through July 31 of 2026, issuance had reached $132 billion. Alphabet alone <a href=\"https:\/\/www.investors.com\/news\/us-debt-ai-borrowing-bessent-bond-market-stocks-dollar\/\">sold $25 billion in bonds in early August<\/a>, at least the eighth hyperscaler offering of that size or greater in 2026. Investors are demanding a return for their risk. The 10-year piece of that August deal paid 85 basis points over Treasuries (up from a 63-basis-point difference on a comparable issue in February), weeks after Alphabet reported its <a href=\"https:\/\/finance.yahoo.com\/markets\/article\/big-tech-will-fund-more-than-a-third-of-its-ai-investments-with-debt-in-2027-goldman-sachs-predicts-145136150.html\">first quarter of negative free cash flow<\/a> since going public in 2004.<\/p>\n<p>All that bond money must come from somewhere, and some of it is coming out of the Treasury market, creating headaches for the government. \u201cThe AI revolution is producing a classic crowding-out effect,\u201d investment strategist <a href=\"https:\/\/www.investors.com\/news\/us-debt-ai-borrowing-bessent-bond-market-stocks-dollar\/\">Ed Yardeni wrote<\/a>. With corporate paper paying more, the government must raise its yields to compete for buyers. That gets expensive. The deficit is running near $2 trillion this fiscal year, and every upward tick in bond yields costs the government more. The <a href=\"https:\/\/www.nytimes.com\/2026\/08\/20\/business\/bond-yields-tech-ai-debt.html\">30-year Treasury yield hit its highest level since 2007<\/a> in late August, and as of September 11, the <a href=\"https:\/\/tradingeconomics.com\/united-states\/government-bond-yield\">10-year sat at 4.97%.<\/a><\/p>\n<p>The Treasury Department has tried to push back by buying its own bonds off the market\u2014increasing demand for them, and, in theory, dragging down the yield as a result. But after tripling the size of the buyback program to a ceiling of $6 billion, yields rose anyway. It does not help that other forces are pushing in the same direction. Surging oil prices have also contributed to market expectations that the Federal Reserve could raise rates to address inflationary pressures.<\/p>\n<p>Where does all this leave hyperscalers and their investors? Microsoft\u2019s latest <a href=\"https:\/\/apps.intelligize.com\/SECFilings\/View\/Filings\/23631562\">10-K<\/a>, filed July 29, is fairly frank in describing associated risks. The company says its AI investments are being made \u201cin advance of fully developed revenue streams,\u201d and that the revenue \u201cmay not be realized in the expected timeframes or at expected levels.\u201d Its ability to keep spending depends on continued access to capital, and the filing warns that \u201cadverse changes in interest rates, credit markets, investor sentiment, or our credit ratings\u201d could raise its cost of capital or limit its ability to execute the strategy at all.<\/p>\n<p>Microsoft\u2019s disclosure points to the broader issue for companies making large AI investments. As more of the buildout shifts from internally generated cash to debt financing, AI exposure increasingly carries financing risk alongside the technology, operational and governance risks companies already disclose.<\/p>\n<p>For issuers, the practical takeaway is that disclosures around AI investment may need to evolve with the way those investments are funded. Companies committing significant capital to AI infrastructure should consider whether investors have enough information to understand their reliance on external financing, sensitivity to interest rates and credit conditions, expected returns on AI spending, and the consequences if anticipated revenue takes longer to materialize. The AI buildout may still be a growth story, but for some companies it is becoming a balance-sheet story too.<\/p>\n<p>Something to watch for . . . if AI doesn\u2019t wipe out humanity first.<\/p>\n<p>\u2014<\/p>\n<p><em>Want faster, smarter insights into SEC filings and disclosures?\u00a0<\/em><a href=\"https:\/\/www.intelligize.com\/request-a-trial\/\"><em>Request a free trial of Intelligize+ AI\u2122\u00a0<\/em><\/a><em>and see what you\u2019ve been missing.\u00a0<\/em><\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>An AI researcher let it slip last week that the technology we\u2019re all embracing could wipe out humanity in the next decade. Bright side: if that came to pass, it would render any concerns expressed in this blog post largely moot. If you wanted something else AI-related to worry about in the meantime, however, there\u2019s [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7063833,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[97],"tags":[27757,3150],"dealstore":[],"offerexpiration":[],"class_list":["post-7063832","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","tag-borrowing","tag-plaid"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>AI Borrowing Goes to Plaid - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=7063832\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"AI Borrowing Goes to Plaid - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"An AI researcher let it slip last week that the technology we\u2019re all embracing could wipe out humanity in the next decade. Bright side: if that came to pass, it would render any concerns expressed in this blog post largely moot. 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