AI borrowing boom could raise Europe’s financing costs

Heavy borrowing to finance AI infrastructure is intensifying competition for investment capital in Europe. Amazon, Alphabet, Meta and Oracle have issued about $250 billion in dollar-denominated bonds since the beginning of 2025, alongside €37 billion in euro-denominated debt. Microsoft has also entered the borrowing market with a $25 billion dollar-denominated bond sale.

Goldman Sachs projects that new AI hyperscaler bond sales will reach $420 billion next year. ING expects about €60 billion to be issued in euros. European Central Bank economists warn that these large, concentrated debt inflows could make financing harder for other companies and potentially increase borrowing costs for governments and international lenders.

The competition comes as France, Germany and Italy face rising sovereign bond yields and pressure on public finances. France’s interest bill is expected to rise from €79 billion currently to €91 billion next year and over €100 billion by 2028. BNP Paribas credit strategist Viktor Hjort says technology companies’ presence in the euro bond market is already substantial enough to compete with corporate and government borrowers.

European businesses could face pressure to reduce investment and shareholder payouts as interest expenses rise. Cities and regions may also face higher financing costs. AI borrowing is not the sole driver of Europe’s fiscal strains, but planned debt issuance could compound pressures linked to energy prices and political uncertainty.