Investment strategies

Who will fund the AI investment boom?

The race to build the next generation of artificial intelligence (AI) is increasingly becoming a race for capital. As investment accelerates, the question is who will finance it - and at what price.

  • de Jeremy Sterngold, Deputy Chief Investment Officer, LGT Wealth Management UK
  • Date
  • Temps de lecture 4 minutes

While the long-term outlook for AI remains compelling, the scale and pace of capital raising could lead to periods of market dislocation and valuation pressure, argues Jeremy Sterngold, Deputy CIO at LGT Wealth Management in London. © VCG/ Getty Images

Summary

  • AI and technology companies are raising record amounts of equity and debt to fund one of the largest corporate investment cycles in modern history.
  • Investors have so far absorbed this wave of fundraising, but are now demanding greater compensation.
  • As AI investment accelerates, companies will need to raise even more money, which could have wider implications for financial markets.
Jeremy Sterngold, Deputy Chief Investment Officer, LGT Wealth Management UK
Sterngold explains why investors should be more selective and disciplined than ever when constructing their portfolios.

The world's largest technology companies are spending hundreds of billions of dollars on the infrastructure needed to support AI. Increasingly, even their substantial cash flows are not enough to cover these ambitions, pushing companies towards equity and bond markets to bridge the gap.

For investors, the sheer scale of fundraising has the potential to influence liquidity, valuations and broader market performance well beyond the technology sector.

Which companies are raising capital?

Over the last three months, markets have witnessed some of the largest AI and technology companies seeking to raise fresh capital from equity markets. SpaceX raised USD 75 billion in its IPO, the largest in history. Claude’s creator Anthropic and ChatGPT founder OpenAI have each filed confidential documents with the Securities and Exchange Commission (SEC) as a step towards potentially taking their companies public. The fundraising momentum has continued, with other technology companies following suit: South Korean memory chipmaker SK Hynix raised nearly USD 27 billion from offering additional shares on the Nasdaq, while Samsung is also reportedly exploring its own ADR offering in the US.

Equity markets are only part of the picture. Companies are also turning to bond markets as they seek to spread the cost of AI investment across multiple sources of capital.

Proceeds for AI expansion

These companies are turning to capital markets for a simple reason: they need substantial amounts of capital to build the physical infrastructure required to support AI. This includes data centres, thousands of high-performance AI chips, additional electricity and cooling capacity, and upgraded fibre and networking infrastructure. Microsoft, Amazon, Alphabet and Meta have all indicated that they will collectively spend hundreds of billions of US dollars in capital expenditure this year, most of it on AI infrastructure.

Although these companies continue to generate substantial free cash flow, cash flows alone are no longer sufficient to cover all costs given the pace of AI investment. More and more management teams therefore need to decide how best to close this funding gap - through debt, equity or a combination of both. Kombination aus beidem.

The numbers illustrate just how quickly the financing cycle has accelerated. In 2026 alone, SpaceX, Alphabet and SK Hynix raised nearly USD 200 billion in total from equity markets. The surge has not been confined to equity markets: last year, AI-focused giants issued more than USD 120 billion in bonds - over four times the average of the previous five years. Global AI-related debt issuance has ramped up significantly, reaching well over USD 200 billion so far this year.

The key question is whether AI companies’ capital raisings offer an attractive opportunity to invest in the next phase of AI-driven growth at favourable valuations, argues Sterngold. © iStock/Gerville

How are markets responding?

Amazon illustrates how investor appetite may be evolving. The company experienced significant investor interest when it sought to raise USD 37 billion in bonds in March, with peak investor demand reaching roughly USD 126 billion. However, when Amazon surprised markets in July by seeking an additional USD 25 billion in bonds, investor interest was far more muted.

Amazon is not an isolated example. SpaceX’s bonds weakened almost immediately after issuance, with its 30-year debt falling around 9 % from its new-issue levels as the company’s equity price gave up its post-IPO gains. The move suggests that credit investors are beginning to demand higher compensation for financing increasingly capital-intensive AI businesses.

To date, markets have largely absorbed this wave of issuance. However, as AI capital expenditure continues to rise, markets will increasingly scrutinise whether the returns offered to bond investors are sufficient to justify these ever-increasing investment programmes. This may prompt equity investors to assess whether they will ultimately be required to shoulder more of the financing burden.

How does this development affect broader markets?

With equity issuance and corporate bond supply expected to remain elevated over the coming quarters, investors will increasingly be asked to allocate fresh capital towards financing these programmes. This creates the possibility of liquidity becoming stretched - eaning more companies are competing for investor capital -particularly if several large issuers come to market simultaneously or broader market sentiment deteriorates.

If that happens, the impact is unlikely to be confined to the technology sector. Other companies and asset classes will compete for the same pool of capital, potentially affecting valuations and liquidity conditions across markets.

What does this mean for investors?

The key question is whether these capital raisings represent an attractive opportunity to invest in the next phase of AI-led growth at favourable valuations, or whether they mark the beginning of a prolonged cycle of capital raising that could weigh on prices as markets absorb an unprecedented wave of new supply.

For investors, this reinforces the importance of remaining selective and disciplined in portfolio construction. While the long-term case for AI remains compelling, the scale and pace of capital raising may create periods of market dislocation and valuation pressure, creating both risks and opportunities. Maintaining diversified portfolios while preserving the flexibility to deploy capital as opportunities emerge will be increasingly important as markets adjust to this phase of the AI investment cycle.

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