Apollo Global president says it'll take 'all the markets' to fund AI spending
In a recent statement at the Milken Institute conference, Jim Zelter, President of Apollo Global Management, emphasized the need for a multifaceted approach to fund the burgeoning capital expenditures in artificial intelligence (AI). Zelter indicated that it will take “all the markets” to support the anticipated spending in this rapidly growing sector.
Debt Funding Outlook
Zelter projected that debt funding for AI capital expenditures will remain robust at least until 2028. He noted that the net origination of investment-grade debt is expected to exceed $1 trillion this year, surpassing net issuance in the U.S. Treasury market.
“If you think about that $800 billion in hyperscaler capital expenditures, a portion will be funded by the cash flow of these companies,” Zelter explained. “A few hundred billion will come from the public investment-grade markets. Our stance is that private investment-grade capital will be the third leg of that funding stool.”
Funding Sources for AI Capital Expenditures
According to Zelter, the funding for AI capital expenditures will require contributions from various sources:
- Equity Market: Investment from shareholders and equity financing.
- Operating Cash Flow: Cash generated from the companies’ operations.
- Public Investment-Grade Market: Debt issued to the public markets.
- Private Investment-Grade Market: Additional debt sourced from private investors.
This collaborative funding approach is essential to meet the increasing demands of AI development and infrastructure.
AI Capital Expenditures in 2026
The year 2026 is poised to be significant for AI capital expenditures, with forecasts indicating a substantial increase. According to Goldman Sachs strategists, consensus forecasts for hyperscaler capital expenditures have risen by nearly $80 billion since the beginning of the earnings season.
The five largest hyperscalers—Amazon, Google, Meta, Microsoft, and Oracle—are expected to invest approximately $751 billion in capital expenditures in 2026. This figure represents an impressive 83% growth compared to 2025.
For context, this estimate has grown from $673 billion at the start of the current earnings season and $546 billion at the beginning of 2026.
Recent Debt Deals
Several major tech companies have recently announced significant debt deals to fund their AI initiatives:
- Oracle: In February, Oracle announced plans to raise between $45 billion and $50 billion through a combination of bond issuance and an “at-the-market” equity program. The funds will be allocated to expanding its cloud infrastructure for clients like Nvidia and OpenAI.
- Meta: In May, Meta completed a $25 billion six-tranche bond sale aimed at supporting its Louisiana data center and broader AI expansion efforts.
- Alphabet: Alphabet issued $31.1 billion in senior unsecured notes in the first quarter of 2026.
This trend marks a fundamental shift in tech financing, as these prominent players move away from relying solely on cash flow to support AI infrastructure and begin utilizing longer-term debt solutions.
Market Reactions and Implications
While equity investors may express concerns over the substantial spending by hyperscalers to fund AI infrastructure, the debt markets have remained stable and willing to finance these initiatives at reasonable interest rates. This stability is crucial, as a jittery debt market could exacerbate tensions for tech investors already wary of high expenditures.
Zelter’s comments highlight the importance of maintaining investor confidence across all markets to ensure the successful funding of AI projects. The collaborative effort among different funding sources is vital for sustaining growth in the AI sector.
Conclusion
As the demand for AI technology continues to surge, the need for diverse funding sources becomes increasingly apparent. Apollo Global’s insights underscore the necessity of leveraging all available markets—equity, operating cash flow, and both public and private investment-grade debt—to adequately support the capital expenditures required for AI advancements. The landscape of tech financing is evolving, and the ability to adapt to these changes will be critical for companies aiming to thrive in the AI space.
Note: The information presented in this article is based on statements made by Jim Zelter and data from various financial sources. The projections and opinions expressed are subject to change based on market conditions and other factors.
