The surge in borrowing fueled by AI may ultimately push interest rates upward, according to Apollo’s chief economist

AI Investment by Major Tech Firms Set to Accelerate in 2026

• Spending on artificial intelligence by leading technology companies is projected to climb sharply again in 2026.
• Torsten Sløk from Apollo warns that increased corporate borrowing to fund AI initiatives could push interest rates higher.
• He suggests that a surge in new investment-grade bonds may divert investors away from the Treasury market.

A leading economist is sounding the alarm over the risks of debt-fueled capital expenditures related to AI in 2026.

Torsten Sløk, Apollo Global Management’s chief economist, highlights that AI-focused tech giants are expected to be major contributors to the issuance of investment-grade bonds this year. As these companies seek to finance new data centers and infrastructure, the influx of bonds could lead to increased interest rates.

The concern is that a rise in corporate debt offerings might pull investors away from other fixed-income markets.

“The notable uptick in bond issuance by hyperscalers raises important questions about who will step in as the next buyer of investment-grade debt,” Sløk wrote. “Will this shift come at the expense of Treasury purchases, thereby lifting rates? Or could it reduce demand for mortgage-backed securities, causing mortgage spreads to widen?”

While Wall Street banks differ on how large this borrowing wave will be in 2026, they all anticipate substantial issuance, with analysts predicting between $1.6 trillion and $2.25 trillion in investment-grade bonds this year.

For Sløk, the key takeaway is that extensive corporate borrowing is likely to broadly elevate interest rates.

“Ultimately, the sheer volume of fixed-income products entering the market this year is considerable and will probably exert upward pressure on both rates and credit spreads as we move through 2026.”

Sløk advises investors to carefully consider how the ongoing AI expansion—especially the development of new data centers and supporting infrastructure—will be financed.