Microsoft to issue $25 billion in bonds for AI buildout

Microsoft will raise $25 billion through a bond offering to finance its expanding data center network. The company announced the plan on Thursday, leveraging its strong financial standing to secure capital for new infrastructure projects.

The software firm holds a top-tier AAA rating from S&P. Management plans to spend $170 billion on capital expenditures in 2026. This spending targets high demand from artificial intelligence labs Anthropic and OpenAI, as well as other corporate clients.

The company stated that net proceeds from the offering will serve general corporate purposes. These uses include funding working capital, capital expenditures, stock repurchases, acquisitions, and debt repayment. The bond offerings are scheduled to close on Nov. 4.

Amy Hood, Microsoft’s finance chief, discussed the strategy during Wednesday’s earnings call. She noted the company will use additional funding sources to supplement cash flow when market conditions are favorable. Hood said, 'We're fortunate to have access in the debt markets, given where our ratings are, and we haven't yet tapped that.'

Other major technology companies have also turned to the bond market this year to support infrastructure growth. Amazon and Alphabet have issued debt for similar projects. CoreWeave, a cloud provider focused on AI, has also used the debt market to expand its data center footprint.

Investors have become more cautious regarding companies with high debt levels as central banks raise interest rates to combat inflation. Microsoft reported positive free cash flow on Wednesday. This result contrasts with Alphabet, which posted negative free cash flow for the second consecutive quarter. Meta reported negative free cash flow last week, while Amazon reported the same on Thursday.

Oracle also unveiled plans on Wednesday to raise $10 billion in new debt. The company expects to return to positive free cash flow in the second half of its fiscal year 2028.