Microsoft Raises $25 Billion at a Low Cost for AI Expansion

Microsoft borrowed $25 billion on October 29 in its first U.S. bond sale since 2017, drawing on its top-tier credit standing as it ramps up investment in artificial intelligence. Its 10-year bonds carried a 5.6% interest rate, only slightly above the U.S. government’s borrowing cost for a similar period.

The company expects capital spending to reach about $170 billion in 2026, including more than $50 billion in the quarter ending in December. Microsoft spent $45.2 billion on capital expenditures in the three months through September, with roughly three-quarters going toward shorter-lived equipment, including processors used in data centers. The $170 billion forecast is below its previous $175 billion projection, reflecting delays in outside computing capacity.

The bond proceeds may support a range of corporate needs, including capital investment, acquisitions, working capital, share repurchases and debt repayment; Microsoft has not said the full amount will go to AI. Chief Financial Officer Amy Hood said the company would seek additional funding when it considered the terms attractive, alongside cash generated by its operations.

Microsoft’s borrowing costs contrast with those facing some other companies investing in AI. SpaceX, rated below Microsoft, is set to pay as much as 8.75% on a $40 billion borrowing, while bonds issued by CoreWeave have traded at yields above 15%. Microsoft remains among just two exchange-listed firms in America with the highest credit ratings from Moody’s and S&P, alongside Johnson & Johnson.