MICHEL MARTIN, HOST:
The same big tech companies that are dominating the stock market are starting to reshape the bond market. Our colleagues from The Indicator - Wailin Wong and Ricky Mulvey - looked into the efforts to fund massive AI data centers and the potential risks to 401(k) retirement plans.
WAILIN WONG, BYLINE: Data centers are all over the news these days. They are flashpoints in local debates about what should be built in communities.
RICKY MULVEY, BYLINE: If you're one of those people who don't want a data center in their backyard, you might want this bond-fueled buildout stopped in its tracks.
WONG: Then, of course, if you're rooting for the stock market to keep going up, you need those data centers to power the hopes and dreams and profits of the tech giants. But enough about stocks. I want to talk about bonds.
ZACHARY GRIFFITHS: Bonds are interesting.
WONG: (Laughter).
GRIFFITHS: I mean, that's what we're always saying.
WONG: This is fellow bond geek Zachary Griffiths. He works at an independent research firm called CreditSights. His specialty is U.S. investment-grade debt. That refers to safe and highly rated bonds. U.S. Treasurys are investment-grade, and so are bonds from Alphabet, Amazon, Meta and Microsoft.
MULVEY: These companies are considered the main hyperscalers. This is a term we didn't really use that much until a few years ago, and now it's getting thrown around all the time.
WONG: Yeah. It's come about because it refers to corporations that run huge data centers. These hulking structures take a lot of money to build, and the hyperscalers have a lot of cash.
MULVEY: And they're not just wading gently into the bond market. According to Vanguard, the five hyperscalers sold more than $90 billion in bonds last year. And they've already sold more than $130 billion so far in 2026.
WONG: And remember, most of the hyperscalers are considered very safe and creditworthy. The bonds they're selling are now competing with U.S. Treasurys for investor dollars. That's helping push up yields for Treasurys.
MULVEY: But investors, like hedge funds, pension funds and insurance companies - they don't have unlimited dollars. So we wanted to know - is there enough demand out there for all of these new AI-related bonds?
WONG: Is it just this, like, limitless appetite for this stuff? Is it like "Mean Girls" - like, the limit does not exist?
GRIFFITHS: The limit may not exist, but what does need to shift is how much spread you're getting.
WONG: Zachary is talking about the returns that investors are asking for. The higher the risk, the more compensation bondholders want.
MULVEY: So is there investor demand? Yes, but with an asterisk.
WONG: The second question we want to ask is, how are bondholders for data center projects going to be paid back? Jonathan Mondillo is with Aberdeen Investments.
JONATHAN MONDILLO: Each contract seems to be written a little bit different. There's a lack of standardization there. And that's a risk, ultimately.
WONG: One risk Jonathan identifies is construction risk. Will the project get done on time? And looking further out, there's a risk of technological obsolescence.
MONDILLO: These are long-term lease structures. You know, who's to say that there's need for that amount of space in the data center in 20 years' time?
MULVEY: Jonathan talks about lease terms because that is a common arrangement for these data centers. Companies like Meta are planning to rent these buildings rather than own them outright.
WONG: These are scenarios that investors have to consider when they're deciding whether to lend money to the hyperscalers - money that they might not make back for decades. And again, if you have savings invested in a bond fund, that's your money at work.
Wailin Wong.
MULVEY: Ricky Mulvey, NPR News.
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