Big Tech Is Borrowing $1 Trillion to Build AI. The Revenue to Pay It Back Doesn't Exist Yet.

The global AI industry will need to generate about $6 trillion in annual revenue by 2031 to justify the data centers now under construction, according to Bain & Company's seventh annual Global Technology Report, released September 29 and as reported by Bloomberg. Existing consumer and enterprise AI products could account for $1.2 trillion to $1.8 trillion of that. The remaining $4.2 trillion or more would have to come from businesses that are still small or don't exist yet.

Bain's figure works backward from spending. The firm projects annual AI infrastructure outlays could reach $1.5 trillion by 2031 and assumes capex runs at about a quarter of revenue, per Network World. Consumer subscriptions and advertising would contribute $200 billion to $400 billion of the total by then, and enterprise adoption another $1 trillion to $1.4 trillion, Techzine reported. For the rest, Bain points to AI search and advertising, autonomous machines, physical AI and robotics, and new product development in fields like pharmaceuticals.

David Crawford, who chairs Bain's technology practice, said funding the buildout sustainably would require adding roughly one percentage point to annual global GDP growth, according to the firm's announcement.

Goldman's nearer number

Goldman Sachs put a shorter-term hurdle on the same spending last week. Strategist Ryan Hammond estimated that the largest U.S. AI spenders need about $300 billion a year in AI revenue to break even on their investments, TheStreet reported, citing Investing.com. Hammond put 2026 capex across the biggest cloud and AI companies at roughly $800 billion, with Wall Street expecting about $1.1 trillion in 2027.

The note named Microsoft, Alphabet, Amazon and Oracle alongside Meta, but Meta's stock took the hardest hit, falling about 4% to $749.26. Goldman told clients that AI's effect on corporate earnings should become easier to see over the next few quarters, and that the companies buying AI services are where to look for it.

The cash ran thin, so they borrowed

For most of the buildout, the hyperscalers paid for data centers out of operating cash. This year that stopped being enough. In the second quarter, Meta spent $31.1 billion on capex against $31.9 billion in operating cash flow, and its free cash flow fell to $784 million from $8.5 billion a year earlier, according to Fortune.

The bond market is making up the difference. Goldman estimates investors have provided about $500 billion in financing to AI-linked companies so far this year, the Financial Times reported in a September 28 Big Read. Amazon, Alphabet, Meta, Microsoft and Oracle account for about $200 billion of that, and are expected to issue more than $1 trillion in new debt over the next few years.

Goldman's own asset management arm has gone underweight the sector's bonds. Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, told Bloomberg TV her team expects heavy hyperscaler issuance to continue and has positioned for it, per TradingView. She framed the call around supply pressure on bond prices and said the team still believes in the case for AI.

Some of the borrowing never reaches the companies' balance sheets. Morgan Stanley estimates about $3 trillion in financing and leasing arrangements tied to Nvidia, Broadcom and the hyperscalers sits off-balance-sheet, Reuters columnist Jamie McGeever wrote last week.

Meta's Hyperion bonds

Meta's largest data center project shows how that works in practice. Hyperion, under construction in Richland Parish, Louisiana, is planned for 5 gigawatts and has absorbed more than $50 billion in investment, McGeever wrote. Private credit firm Blue Owl owns 80% of the project and Meta owns 20%, which keeps most of the debt off Meta's books, NPR reported.

A Blue Owl vehicle called Beignet Investor LLC sold $27 billion of 6.581% senior secured notes due 2049 to pay for it, and Meta's lease payments service the debt. S&P rated the notes A+ at issuance last October, close to Meta's own corporate rating, while warning that substantial credit risk could pass to Meta during construction and operation.

The notes traded as high as 110 cents on the dollar shortly after the sale, according to Protos. On September 28 they changed hands at 91 cents, pushing the yield to about 7.55%, McGeever reported. That works out to roughly 230 basis points over Treasuries, compared with 185 at launch. Meta's credit default swaps moved toward 100 basis points as readings for its peers reached records, Finimize reported.

Meta is still raising money. The FT reported the company plans to sell bonds in Europe for the first time this autumn.

What to watch next

Third-quarter earnings later this month will show whether the hyperscalers raise capex guidance again and how much of it they expect to fund with debt. The Beignet notes offer a second read on the same question, since their price moves with how long lenders think they'll be waiting on AI revenue.

For enterprise buyers, the financing deserves as much attention as the spending. The cloud capacity companies are contracting for over the next several years is being built partly with borrowed money, at borrowing costs that have been rising. If Bain's new revenue arrives on schedule, that debt is manageable. If it arrives late, the cost of carrying it has to land somewhere, and cloud pricing is one candidate.