Spending on AI is increasingly fuelled by debt, Goldman Sachs says

In the absence of macro jobs data due to the U.S. government shutdown, traders are piling into AI stocks, ING told clients this morning. “Financial market volatility is falling across the board, partly driven by the US government shutdown and the delay to key data releases such as the September jobs data. Instead, investors remain transfixed by the AI-driven rally in megacap tech shares, which shows no signs of slowing.” S&P futures were up 0.12% this morning, premarket.

Stocks are benefiting from the massive amount of capital expenditure (capex) coming from companies that are investing heavily in AI. “For now, AI is being driven by a handful of US Big Tech players spending almost $350 billion on Cap-Ex this year with now the cavalry coming as more enterprises and governments from around the world get into the AI spending game. The Middle East is a perfect example as now Saudi and UAE are diving into the deep end of the pool with Nvidia and US hyperscalers set to build out massive AI driven data centers to fuel the use cases for the coming years,” Wedbush’s Dan Ives told clients in a note this morning.

But where is all that money coming from, exactly?

Goldman Sachs notes that, increasingly, it is coming from debt. Over the last three years, most capex came from the cash sitting on tech companies’ balance sheets. But now those companies are increasingly borrowing money to fun AI build-out. 

“These AI-related issuers have accounted for $141 billion in corporate credit issuance in 2025 to-date, eclipsing full-year 2024 gross supply of $127 billion,” Lotfi Karoui and his colleagues wrote in a note seen by Fortune.

The shift will marginally reduce the quality of corporate credit, Karoui wrote. “The read-through for credit markets is, on the margin, negative, in our view. While not yet a cause for alarm, given both the high cashflow generation and low leverage among large tech companies, the shifting funding mix of capex beyond cash is worth monitoring.”

The note is interesting because there has been a lot of talk on Wall Street recently about the quality of corporate debt. Two auto-industry companies, First Brands and Tricolor, recently collapsed into bankruptcy because they issued too much debt to lenders who thought they were safe. Jim Chanos and PIMCO President Christian Stracke have both recetly bemoaned cracks in the private credit market. 

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

• S&P 500 futures were up 0.12% this morning. The index closed up marginally in its last session at a new high of 6.715. 
• STOXX Europe 600 was up 0.32% in early trading. 
• The U.K.’s FTSE 100 was up 0.54% in early trading. 
• Japan’s Nikkei 225 was up 1.85%. 
• China’s CSI 300 was up 0.45%. 
• The South Korea KOSPI was up 2.7%. 
• India’s Nifty 50 was up 0.11% before the end of the session. 
• Bitcoin rose to $120.1K.