If the AI boom needs fuel, the bond market is holding the gas can.

Alphabet proved that this week, raising nearly $32 billion in under a day after selling record-breaking sterling and Swiss franc bonds. It even sold a rare 100-year note, a first for a tech company since the 1990s, with demand for that century-long debt nearly 10 times the $1.4 billion offered.

The frenzy follows Oracle’s own blockbuster deal earlier this month, when the company pulled in $25 billion to bankroll its AI ambitions after investors placed roughly $129 billion in orders.

Financing the AI buildout

In aggregate, UBS calculates that companies tied to tech and AI raised about $710 billion in debt last year, and could raise nearly $1 trillion in 2026.

That growth reflects the scale of AI investment now underway. Alphabet plans to nearly double capex from $91 billion in 2025 to $185 billion in 2026, and alongside Microsoft, Amazon, and Meta, total capex among hyperscalers is projected to reach $700 billion this year—up about 60% from last year. The sheer size and speed of that spending is pushing tech giants to rely more heavily on debt, raising questions about how they plan to balance their balance sheets.

Yet bond investors seem unfazed. Credit spreads hit a 27-year low for highly rated corporate debt in late January, while junk bond spreads sit near 18-year lows. In other words, even as borrowing accelerates to fund the AI buildout, investors are demanding minimal extra compensation for the risk.

Part of the appeal is relative value: US yields remain elevated compared with most developed markets, attracting global buyers. And if the Fed cuts rates, bond prices could get another boost.

The structural shift

As tech giants ramp up AI borrowing, more of that debt is flowing into passive funds. These index-tracking vehicles buy broad baskets of bonds and typically hold them to maturity, raising concerns that their automatic demand may be distorting risk signals and leaving investors vulnerable if market conditions shift.

The coming wave of supply will test that assumption. Some warn the market could be vulnerable to a sharp repricing if demand softens. Others see a deeper shift underway: as mega-cap tech bonds take up more room in investment-grade indexes, the structure of the credit market itself may start to change.

For all its algorithmic ambition, the AI boom ultimately rests on something far more traditional: good old bonds.—SY

🟢 What’s up

• Cloud computing company Fastly surged 72.18% on a strong fourth-quarter, with analysts upgrading the stock on growing AI potential.
• Anheuser-Busch rose 3.7% after beating Q4 earnings expectations, as higher prices and premium growth offset a 1.5% drop in volumes.
• Crocs gained 19.01% after topping fourth-quarter estimates, signaling a rebound following last year’s 22% slide tied to slowing growth and tariff concerns.
• Novocure jumped 19.33% on FDA approval for its treatment targeting certain pancreatic cancers.
• Cognex advanced 36.35% following a strong quarterly report, adding to signs of improving US manufacturing activity.

What’s down

• AST SpaceMobile fell 15.17% after pricing $1 billion in convertible senior notes due 2036.
• QuantumScape dropped 11.96% after it reported a fourth-quarter loss and guided to higher-than-expected capital spending in 2026.
• Baxter International slid 15.99% on weaker-than-expected quarterly earnings and a subdued outlook for 2026.
• Lululemon declined 3.6% amid another “see-through” leggings issue, marking its second product quality controversy in under a month.
• Cisco fell 12.32% despite beating estimates, as investors judged its AI momentum insufficient to clear Wall Street’s elevated expectations.
• AppLovin plunged 19.68% even after Q4 revenue jumped 66% to $1.66 billion and topped forecasts, with AI concerns weighing on its ad-tech outlook.
• Real estate stocks tumbled, with CBRE down 8.84%, Jones Lang LaSalle off 7.62%, Hudson Pacific Properties lower by 4.63%, and Newmark falling 4.15%, as investors rotated out of companies seen as vulnerable to AI disruption.

If you think the stock market’s been volatile lately, get a load of bitcoin.

When the crypto king tumbled from its all-time high in October, stalwarts claimed the decline was a feature, not a bug, and that such declines happen from time to time with a nascent asset like bitcoin. For a moment there, they seemed to be correct: bitcoin clawed its way upwards in January, reaching a near-term high just above $96,000 in the middle of the month.

Then the bottom fell out once again, and bitcoin fell to a 16-month low of $60,062 a week ago. Now, $70,000 has become the new line in the sand that bitcoin just can’t seem to stay above for very long—and one Wall Street firm says the worst is yet to come.

Standard Chartered already cut its 2026 end-of-year price target for bitcoin from a lofty $300,000 to $150,000 in December. Earlier today, it made yet another adjustment: the bank thinks bitcoin will tumble to a low of $50,000, before recovering to $100,000 by year’s end.

The firm thinks a combination of a softer economic backdrop, a market that won’t enjoy a boost from many interest rate cuts this year, and rising bitcoin ETF outflows will keep the currency on the back foot for the foreseeable future. Throw in a slowdown on Capitol Hill, where a crypto market structure bill that could have lent bitcoin some support has been stonewalled, and it’s no wonder that Galaxy CEO Mike Novogratz says crypto’s “age of speculation” has ended.—MR

It’s the Olympics… of the AI trade. Right now, the star players of the bull and bear teams are duking it out over whether the current tech downturn is the beginning of the end, or a buying opportunity.

Let’s take a look at our competitors: First, allll the way from Wedbush securities, we have Dan Ives (cue the sound of thousands of Tesla robots cheering). Ives is an avid tech bull who sees AI as a revolutionary force that will not only realign the entire economy, but will keep lifting shares of major tech companies to new heights.

And in the other corner, we have Michael Burry. You may recognize him from The Big Short, which earned him enough credibility to launch a Substack where he outlines his bearish theses on various companies. Burry is seriously skeptical of the AI trade’s valuations, and foresees (another) big bubble. Since launching his Substack Cassanda Unchained, he has unveiled bearish theses on firms like Nvidia, Palantir, Tesla, and most recently, Alphabet.

What they’re saying

So, is this recent tech downturn justified—or a moment for investors to get the biggest AI names at a bargain?

“Everything we are seeing in the field, along with our recent trips to CES in Las Vegas and at Davos...it’s crystal clear to us the AI Revolution is accelerating at a warp speed pace with 2026 being an inflection point year for AI,” wrote Ives on Monday.

And where should investors be looking specifically? “Focus on Microsoft and Google with this sell-off,” wrote Ives in a note this week. “We believe that Microsoft is on its way to accelerating cloud and AI monetization,” he added.

Burry is also telling investors to focus on Google, but for the totally opposite reason. Earlier this week, he wrote on X that Alphabet’s decision to offer 100-year debt as part of its massive bond sale mirrors Motorola’s in 1997—shortly before the stock’s epic downfall.

“At the start of 1997, Motorola was a top 25 market cap and top 25 revenue corporation in America. Never again,” Burry wrote ominously.

The big picture: The question of who’s wrong and who’s right in this case is impossible to answer. After all, it’s not just Ives and Burry—tons of the smartest experts around have totally opposing outlooks on how AI will end up shaping our economy.

For now, at least, the battle between bulls and bears will have to be a draw.—LB

• Read the “AI is the new Covid” article going mega-viral on X.
• American Airlines flight attendants are planning to picket the airline’s corporate HQ in Fort Worth, Texas as part of their push for new leadership.
• The House passed a resolution disapproving of President Trump’s tariffs against Canada.
• Venezuela plans to give Chevron more land for drilling oil.
• Trump revoked an EPA finding that classified carbon dioxide and other greenhouse gases as a threat to the public, undermining efforts to thwart climate change.
• Israel has arrested multiple people, including soldiers, for using classified military information to bet on Polymarket.

Economic reports: Keep an eye out for the latest inflation reading when we get the CPI report for January early tomorrow morning

Earnings announcements: Advance Auto Parts, NatWest, Cameco, Moderna, and Wendy’s