For most of the past decade, Big Tech paid for its AI buildout with cash sitting in the bank. That era just ended.
The 30-year U.S. Treasury yield, a benchmark for mortgage rates and other consumer loans, rose this week to its highest level since 2007.
The Treasury Department stepped in Wednesday, expanding how much of its own debt it can buy to push yields back down. By Thursday, yields were climbing again.
From Self-Funded to Self-Financed by Debt
The shift behind this is straightforward. AI infrastructure got too expensive to pay for out of pocket, even for the companies with the deepest pockets in the world.
"For most of the past decade, the large technology companies leading the A.I. build-out have funded their investment from operating cash flow," said Lucas Baynes, a senior investment strategist at Vanguard.
"That era is ending," he said.
The five major hyperscalers, Alphabet, Amazon, Meta, Microsoft and Oracle, issued less than $30 billion in combined debt annually from 2020 through 2024. That jumped past $100 billion in 2025.
This year, it's already topped $200 billion. Microsoft is the only one of the five that hasn't tapped the bond market in the past year.
Vanguard projects broader AI-related debt issuance, beyond just these five companies, will surpass $1 trillion annually from 2027 through 2030.
Why This Shows Up in Your Mortgage Rate
Higher AI-driven growth forecasts give the Federal Reserve reason to keep rates elevated, to avoid that growth spilling into inflation. That's part of why Treasury yields have climbed alongside the borrowing.
AI debt isn't the only factor. The federal deficit and the prolonged war with Iran are both pushing yields higher too, and analysts are split on how much of the Treasury move traces directly back to AI borrowing specifically versus corporate bonds more broadly.
What's clearer is the toll on the broader economy. AI spending propped up growth for years.
Now that spending is adding to borrowing costs across the board, for consumers, businesses and the government alike.
The Spreads Are Widening Too
Corporate bond spreads, the extra interest companies pay above Treasury yields, are climbing for AI's biggest borrowers specifically.
Alphabet's 10-year borrowing spread rose from 0.63 percentage points in April to 0.85 points this month. Amazon's rose from 0.55 points in November to 0.8 points in July.
Oracle, the lowest-rated of the five hyperscalers, saw its spread climb from 1.05 points in September to 1.45 points by February, now above the roughly 1.02-point average for investment-grade corporate bonds generally.
Not a Default Risk. A Supply Problem.
None of this reflects doubt about whether these companies can pay their debts back.
"They're not in danger of defaulting," said Matt Eagan, a portfolio manager at Loomis Sayles. The real issue, he said, is "about more debt coming at a cheaper price and you are left stuck holding this."
In plain terms, investors are being asked to absorb an enormous, fast-growing supply of bonds all at once, and they're demanding more compensation to do it.
What This Means for Miami
South Florida's real estate market runs directly on the 30-year Treasury yield this story centers on. When that benchmark hits an 18-year high, mortgage costs for Miami buyers and refinancers move with it, regardless of anything happening locally.
This is also the concrete, dollars-and-cents version of the concentration risk J.P. Morgan's Bill Eigen has been warning Miami investors about all year.
AI infrastructure spending isn't just a tech-sector story anymore. It's now a variable in ordinary Miami mortgage math, corporate borrowing costs, and how much room the Fed has to eventually cut rates.