US tech borrowing spree could raise Europe’s debt costs

US tech giants financing the AI buildout are competing with European governments and businesses for investment capital, potentially pushing borrowing costs higher. Amazon, Alphabet, Meta and Oracle have issued about ? billion in dollar bonds since the beginning of 2025, alongside €37 billion (? billion) in euro bonds. Goldman Sachs expects new AI hyperscaler bond sales to reach ? billion next year, while ING forecasts about €60 billion will be issued in euros.

The additional supply comes as France, Germany and Italy face strained public finances and rising sovereign yields. France’s interest bill is set to increase from €79 billion currently to €91 billion next year and over €100 billion by 2028. European Central Bank economists have warned that concentrated tech borrowing could restrict financing for other sectors and spill over into government and international lender debt markets.

European businesses also face pressure. Goldman Sachs found that interest costs as a share of sales have risen by nearly half since 2022 among Stoxx 600 companies, cutting earnings by more than 5%. Further competition could squeeze spending on plants, equipment, research and shareholder payouts. Local governments may also be exposed: an OECD study linked faster AI adoption with higher municipal borrowing costs in several European countries. AI bonds are not the sole driver of Europe’s fiscal strains, but planned issuance could intensify them.