How AI giants could raise the cost of borrowing in Europe

US tech giants are issuing significant amounts of AI bonds, competing for investment capital with European governments, which may lead to increased borrowing costs in Europe. The influx of over $1 trillion into AI has resulted in major companies like Amazon and Google issuing around $250 billion in bonds since 2025. This competition is straining public finances in countries like France, Germany, and Italy, where bond yields have risen sharply. Economists warn that the presence of these AI giants could hinder access to finance for other sectors, potentially increasing costs for governments and international lenders. Rising interest rates are already impacting European companies' earnings, forcing them to reconsider investments and shareholder payouts. The situation may also affect local governments, leading to higher borrowing costs for essential services.