• UBS (UBS) lifts its 2026 forecast for U.S. investment-grade tech bond issuance to $360 billion, up from $300 billion, driven by AI-driven capital spending from megacaps like Meta Platforms (META), Amazon (AMZN), and Alphabet (GOOGL).
  • The bank cuts its U.S. leveraged loan forecast to $360 billion from $450 billion, warning AI-related disruption could widen spreads and curb refinancing activity.
  • Hyperscaler capex is expected to reach $770 billion in 2026, about 23% above prior estimates, potentially lifting public debt issuance to as much as $240 billion.

UBS has significantly revised its forecasts for tech financing, highlighting a stark divergence between bond and loan markets as artificial intelligence investments reshape capital strategies. The bank now projects U.S. investment-grade tech bond issuance to hit $360 billion in 2026, a sharp increase from its earlier $300 billion estimate, according to people familiar with the matter. This adjustment pushes UBS's total U.S. investment-grade issuance outlook to $1.8 trillion, with technology accounting for roughly 20% of the total.

The surge is fueled by unprecedented capital expenditures from hyperscalers, with UBS expecting their spending to reach $770 billion in 2026, about 23% above prior estimates. This could drive public debt issuance from these firms to as much as $240 billion, reflecting the intense competition in AI infrastructure buildout. Alphabet's recent multi-currency bond offering of $31.5 billion, which included a rare 100-year "century bond" in sterling and a Swiss franc issuance, exemplifies the scale of these fundraising efforts, sources indicate.

In contrast, UBS cut its U.S. leveraged loan forecast to $360 billion from $450 billion, signaling a shift in how tech companies are financing operations. The bank warns that AI-related disruption could widen spreads and curtail refinancing activity in the loan market, creating potential headwinds for borrowers reliant on this channel. Efforts to restructure debt have hit a snag for some firms, with concerns mounting about credit stress among those heavily dependent on AI spending.

Market context reveals a mixed picture: corporate bond spreads remain tight despite record issuance volumes, with some tech firms attracting orders several times the size of their offerings, suggesting robust investor appetite. However, technology earnings expectations have been set at exceptionally high levels, making it difficult for companies to exceed guidance, according to analysts. Post-earnings reports show that some major tech firms are decelerating capex spending, which could pressure valuations in the near term.

UBS expects technology to underperform relative to economically sensitive sectors in the coming months, though it anticipates opportunities will improve later in 2026. The divergence in financing preferences underscores a structural shift, with bond markets absorbing supply healthily while loan markets contract amid refinancing risks. Without a deal, some companies might face tighter credit conditions, though most megacaps have ample liquidity to navigate the transition.

Attempts to reach UBS for additional comment were unsuccessful, but industry insiders note that the forecasts reflect ongoing negotiations and market dynamics. The financing landscape is evolving rapidly, with AI-driven capex reshaping how tech giants access capital, and further updates are expected as 2026 approaches.