The AI race is going into debt: the market starts counting the cost
The US stock market remains close to record levels, but one of its key growth drivers is beginning to create a new problem. The massive construction of data centers and purchases of artificial intelligence equipment are increasingly being financed not with companies’ available cash, but through new borrowing.
In the current session,
#NQ100 is trading around 31,118 points, following a recent rise above
31,200, while
#SP500 is trading near 7,794 points, retreating from levels above
7,830. So far, the move looks more like a minor correction after a strong rally. However, the increase in corporate debt has coincided with US Treasury yields remaining near multi-year highs.
Want to protect yourself from a stop-out? If you lose your deposit, FreshForex will compensate 50% of your insured funds! Learn more
$25 for a risk-free start! Register, complete verification, enter promo code SOEHOE10 in your Personal Area, and get a trading bonus with no deposit required.
Why Is AI Becoming More Expensive?
- Technology companies are increasingly borrowing money. Over the past year, Alphabet, Amazon, Meta, Microsoft, and Oracle have issued around $220 billion in bonds, directing a significant portion of the capital toward data centers, computing capacity, and other AI infrastructure.
- Debt is starting to compete for investors’ money. At the same time, the US government is issuing huge amounts of debt. The more new securities enter the market, the higher the yields that need to be offered to investors, making it more expensive to finance further growth.
- High yields are already weighing on stock indices. Rising borrowing costs are particularly sensitive for technology companies, whose valuations are largely based on future earnings. As a result, #NQ100 is becoming increasingly dependent on whether the debt market can stabilize.
#Oracle Shows the Other Side of the AI Boom
Oracle (#Oracle) is a good example of how the market has started to assess not only the prospects of artificial intelligence, but also the cost of financing them. The company is aggressively expanding its cloud infrastructure and data centers, but this requires it to significantly increase borrowing and long-term financial obligations.
At the beginning of September, #Oracle shares rose
above $165, before pulling back and now trading at around
$143.59. This means that despite strong demand for computing capacity, the stock is approximately
13–14% below its recent high. For traders, this is a telling signal: the market is no longer willing to automatically reward every new AI investment if it comes with rapidly rising debt.
The situation becomes particularly important against the backdrop of high interest rates. The yield on 10-year US government bonds remains above 5%, while the technology sector’s enormous capital requirements are putting additional pressure on financing costs.
According to FreshForex analysts,
in the short term, increased pressure on US indices is more likely than another rapid move higher. #NQ100 has so far failed to firmly break above the
31,200–31,300 area, while #SP500 has retreated from levels above
7,830. If borrowing costs continue to rise, #NQ100 could correct toward
30,700–30,900, while #SP500 could move toward
7,700–7,750. The performance of #Oracle around
$143.59 further shows that investors are already becoming more selective when it comes to companies financing their AI expansion through debt.
Our trading terminal offers 250+ instruments, including CFDs on stocks, indices, and crypto assets. Follow the trends and seize the opportunities!
Profit from the AI race
