AI debt tsunami, combined with the impact of oil prices, technology bonds suffered a "double blow" and collapsed across the board.

Concerns about the continuous expansion of debt fueled by the market's AI investment frenzy reignited, compounded by escalating conflicts in the Middle East, leading to a collective decline in bonds of some large tech companies in the United States on Thursday. As oil prices surged above $100 per barrel, inflation concerns heated up, causing long-term bond yields to rise, further increasing the financing costs for companies that have already invested billions of dollars in AI construction. Alphabet Inc. Class C, the parent company of Alphabet Inc. (GOOGL.US), worsened the decline with its quarterly financial report released after the market closed on Wednesday. The company raised its full-year capital spending guidance, indicating that new bond issuances to support the investment frenzy will continue to flow into the market. Selling pressure pushed the yield on Alphabet's 5.5% bonds due in 2046 up by about 9 basis points to 6.11%, widening the spread with the highest-rated benchmark to about 91 basis points, an increase of 6 basis points from Wednesday. The yield on some bonds of Oracle Corp. (ORCL.US), a core enterprise in data center construction, due in 2030, surged by 17 basis points to about 6.09%. Meanwhile, investors have been raising the credit default swap (CDS) prices for Microsoft Corporation, Amazon.com, Inc., and other companies' debts, reflecting concerns about rising risks. Tony Trzcinka, portfolio manager at Impax Asset Management, said, "The market is facing a triple blow of anxiety over AI capital spending, oil price shocks, and interest rate repricing." The severe volatility in the bond market accompanied a comprehensive decline in the stock market, with the Nasdaq 100 index falling by nearly 2% on the day, marking the largest single-day decline for the "Big Tech Seven" since the tariff panic in April 2025. Massive AI investment borrowing, with a total of about $350 billion so far this year alone, has created sustained pressure on the bond market, with signs that investors are struggling to absorb a large amount of new bonds. At the same time, the market is also widely questioning whether AI can generate enough profit to cover the high costs. Another sign of heightened risk aversion is that, according to LSEG Lipper data, investors withdrew $7.1 billion cash from US high-grade bond funds in the week ending Wednesday, marking the largest single-week outflow since the early days of the COVID-19 outbreak in April 2020. Mark Clegg, senior fixed income trader at Allspring Global Investments, pointed out, "The tech sector used to be a safe haven for investors, but now mega-companies are poised to surpass the big six banks, becoming the largest issuers in the investment-grade market. Even the rumor of another $20 billion bond issuance causes the pricing of the entire sector to widen across the board. This is supply fatigue, and it is intensifying week by week." There are still plans for large-scale issuances. BlackRock, Inc. is seeking to issue over $12 billion in bonds to finance Meta Platforms Inc.'s data center project in El Paso, Texas. Barclays has also raised its expectations for US investment-grade bond issuances this year, increasing from $1.6 trillion to $1.9 trillion to reflect the surge in AI-related debt. John Lloyd, Global Multi-Sector Credit Director and Portfolio Manager at Janus Henderson Investors, said, "The market is acutely aware that there is no sign of any easing in supply for all asset classes."