In 2025, a financing frenzy swept through the US corporate landscape as companies rushed to bolster their AI infrastructure development. Bond issuance surged past the $200 billion mark, setting an all-time high. Analysts are sounding the alarm, cautioning that this "AI debt boom" is rapidly permeating the credit market and could potentially ignite systemic risks in the years ahead.

Tech behemoths such as Meta and Oracle have turned to massive bond issuances to satisfy the skyrocketing capital expenditure requirements fueled by the AI craze. Yet, this strategy comes with significant risks. There's a glaring mismatch between the concentrated influx of capital and the uncertain returns on AI investments. Additionally, long-term bonds are highly sensitive to interest rate fluctuations, further amplifying market risks.

If the AI investment bubble were to burst, the capital expenditures that are heavily dependent on bond financing could swiftly transform into non-performing loans. This, in turn, could trigger a domino effect, sending shockwaves through the entire financial system.