BofA's Hartnett says slumped tech debt may be worth a closer look
Bank of America strategist Michael Hartnett says tech bonds that have slumped this year could look attractive as AI borrowing lifts yields and cuts buybacks.
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what happened
Seeking Alpha, citing Bank of America's latest Flow Show note, reports that strategist Michael Hartnett sees a possible opening in beaten-down technology bonds. He links the move to an unprecedented wave of artificial intelligence borrowing, which has pushed yields higher and is ending the era of mega-cap share buybacks.
U.S. investment-grade tech bonds are down 9% year to date, and their return relative to the broader investment-grade index has fallen to a 30-year low. The main driver is a supply glut from hyperscalers Alphabet, Meta, Amazon, Microsoft and Oracle, whose bond issuance reached $182 billion in 2026, versus $17 billion in 2024. High-grade yields now sit in a 6% to 8% range, while speculative-grade paper from CoreWeave and Galaxy yields 14.26% and 11.44%.
Hyperscalers have also issued $89 billion of equity, bringing combined debt and equity issuance to $271 billion year to date. Their share buybacks have slowed to an annualized pace of about $14 billion, down from $105 billion in 2024.
why it matters
The report frames heavier capital spending on AI as shifting the burden from shareholders to creditors. Hartnett argues bonds may be leaving a period of underperformance versus equities, but the flow of new supply remains the main pressure on prices.
market impact
US tech bonds: heavy new issuance pressures prices and lifts yields.
- US tech investment-grade bonds pressure down — heavy hyperscaler issuance pushes bond prices lower
tags
instruments
sources
- BofA’s Hartnett calls beaten-down tech bonds ‘diamonds in the rough’ — Seeking Alpha, 30 October 2026 at 13:32 UTC
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