[Today’s Signal] AI Is Absorbing Capital — And Long-Term Rates Are Rising Even as the Fed Stands Still

The article examines the growing demand for capital driven by the artificial intelligence (AI) sector, as evidenced by the substantial bond issuance by major technology companies. Despite the Federal Reserve maintaining its benchmark interest rate at 3.50%–3.75% through the end of the year, the yield on 30-year U.S. Treasury bonds has risen to 5.3%, the highest since 2007.

This divergence between policy rates and the cost of capital is attributed to the record private-sector demand for AI infrastructure financing. Companies such as Amazon, Alphabet, Meta, and Oracle have issued approximately $194 billion in corporate bonds through July, a 79% increase compared to all of 2025. Goldman Sachs projects that bond issuance by five hyperscalers, including Microsoft, will reach about $250 billion this year, and $400 billion in 2027.

As governments and AI companies vie for limited long-duration funding, the term "capital scarcity" is becoming increasingly relevant. The shift is also reflected in corporate bond demand, with investor orders for hyperscaler bonds falling from five times the amount offered in February to less than two times in July. Companies are finding it more challenging to secure long-term capital at affordable rates, a critical factor for AI companies as they expand their infrastructure globally.

Nvidia's $105 billion guarantee for an Ohio data center illustrates the escalating competition for AI capital, with companies extending beyond the U.S. dollar bond market to secure funding.

Brief written by urgent.news from Korea IT Times's own syndicated text. Machine-written — may contain errors; check the original before relying on it.