A borrowing boom tied to artificial intelligence is on track to collide with a surge in US debt supply, threatening to push up the cost of money.
Bridgewater Associates founder Ray Dalio projects annual net U.S. debt supply will climb to about $4.4 trillion in 2027 from about $3.5 trillion in 2025, reports 24/7 Wall St.
Dalio says that figure does not include maturing debt that has to be resold.
In a LinkedIn post on October 13th, Dalio says AI hyperscaler bond issuance reached about $220 billion in the first half of the year, versus about $108 billion for all of 2025.
He adds that higher capex (capital expenditure) funded by more borrowing and equity issuance is leading to declining free cash flow, which he calls “the classic first stage of a squeeze.”
Says Dalio,
“This market should be viewed as the canary in the coal mine.”
The International Monetary Fund separately reports that hyperscalers now account for 10% of global investment-grade bond issuance, up from less than 1% in 2024. If buyers demand higher yields to absorb all that supply, borrowers from Washington to Silicon Valley will have to pay more.
Supplier financing is growing too, with Broadcom (AVGO) agreeing to lend Anthropic up to $42 billion to buy its chips .
Says Dalio,
“The way I would think about the 2027 challenge is that the supply of debt will likely rise from about $3.5 trillion in annual net debt supply in 2025 to about $4.4 trillion in 2027, which is an incremental ~$0.5 trillion per year, not including debt rollovers. In other words, the American corporate piece—particularly the AI complex—is becoming very big at the same time as the Treasury piece is already enormous.”
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