AI companies have announced over $200 billion worth of new cash borrowing and equity financing deals during the second half of this year despite the PHLX Semiconductor Sector shedding a quarter of its value in the same period.
Created in 1993 by the Philadelphia Stock Exchange, the PHLX Semiconductor Sector is a capitalization-weighted index made up of the 30 largest US-traded companies that design, distribute, manufacture, and sell semiconductors.
As stock prices across the AI sector have declined, executives have rushed to secure financing via capital raises. Among them, Oracle filed $20 billion worth of fresh debt and equity offerings this week, adding to a record-shattering $95 billion financing plan by Meta.
Microsoft joined in the borrowing spree, pricing a $25 billion bond on October 29 — the company’s first major US debt sale in nine years.
All of the biggest AI companies are borrowing at once. Alphabet (Gemini AI), SpaceX (Grok AI), Meta (Meta AI), Microsoft (CoPilot AI), along with Oracle, have announced $129 billion in combined financing since last week alone.
The inverse correlation between AI stock performance and fundraising by those same companies is particularly obvious since June 30, with a step-up in borrowing as share prices have crashed 27%, as measured by SOXQ, an ETF tracking the PHLX Semiconductor Sector index.
AI companies supercharge borrowing
On a year-to-date basis, AI hyperscalers have already borrowed at least $214 billion in 2026, already 157% more than the $83 billion they raised across all of 2025.
For example, Meta’s new financing plan from last Monday paired $35 billion of stock sales with a $60 billion at-the-market stock sale program.
Days earlier, Mark Zuckerberg’s company guided $135-145 billion worth of 2026 capital expenditures.
That’s mostly financing the company’s massive AI investments, with spending on compute and infrastructure dwarfing everything Meta plans to generate in operating cash flow this year.
Nebius, an AI neocloud company, closed a $5.75 billion convertible sale in August. Its communications chief called it one of the largest corporate convertibles in its history.
CoreWeave, a Jensen Huang-endorsed AI neocloud, issued $4.2 billion more convertible debt on September 22. Its total debt now exceeds $35 billion.
Five-year credit default swaps of CoreWeave breached a concerning 1,000 basis points in October, as credit investors view its likelihood of default rising.
Including off-balance-sheet commitments, hyperscalers’ aggregate obligations now sit near $3.5 trillion, per calculations from UBS.
Read more: Meta’s AI bond just hit a record low as its stock soared
Large drawdowns in AI stocks
As AI executives have raced to borrow more money, common shareholders have suffered declining confidence in business prospects. CoreWeave stock has declined 63% from its high this year. Nebius is down 53%.
Even the bluest of bluechips are delivering massive drawdowns.
From their peaks this year, Oracle has declined 55%, Meta 22%, Alphabet 31%, and Nvidia 17%.
Michael Burry, the investor who shorted subprime mortgages before 2008, has told subscribers that Nvidia’s more than $500 billion off-balance-sheet financing has “shades of Enron” and reads as “a sign of desperation.”
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