JPMorgan’s Aliaga Warns of Fraying Corporate Balance Sheets Amid AI Spending Surge

On December 19, 2025, JPMorgan Global Market Strategist Stephanie Aliaga appeared on Bloomberg Tech to highlight emerging risks to corporate balance sheets amid aggressive AI spending and private market fundraising, warning that balance sheets are “starting to fray” [0]. This caution aligns with broader market trends identified by external reports:

• Tech firms including Meta, Oracle, and private players xAI and CoreWeave have shifted over $120 billion of AI data-center debt off their balance sheets using SPVs, masking true leverage levels [1].
• Global tech companies issued a record $428.3 billion in bonds in 2025 (U.S. firms accounting for $341.8 billion), driven largely by AI infrastructure spending [2].
• Oracle alone has $248 billion in off-balance-sheet lease commitments, “substantially all” related to AI-focused data centers and cloud capacity [3].

AI infrastructure spending is estimated at $360 billion in 2025 (up from $230 billion in 2024), fueled by hyperscalers like Amazon, Microsoft, and Alphabet, creating ongoing capital demands [4]. While the median debt-to-EBITDA ratio for large tech firms (0.4) remains below historical highs (up from 0.2 in 2020), the rapid pace of debt growth and off-balance-sheet activity has raised sustainability and transparency concerns [2].

1. Disconnect Between Reported and Actual Leverage
   : The $120 billion in AI debt moved off balance sheets via SPVs creates a gap between stated financial health and actual economic risk, amplifying the “fraying” balance sheet warning [1].
2. Investor Sentiment Shift
   : Market participants are moving beyond prioritizing AI spending volume, now scrutinizing the transparency of funding models and balance-sheet sustainability—punishing firms with aggressive off-balance-sheet financing (e.g., Oracle’s recent stock slip) [3][4].
3. Credit Market Saturation Risk
   : The record $428.3 billion in tech bond issuance suggests potential saturation, which could lead to higher borrowing costs for AI projects in 2026 [2].
4. Obsolescence-Driven Reinvestment Pressure
   : AI infrastructure’s rapid technological obsolescence requires continuous capital input, making debt-funded models increasingly vulnerable if returns on AI investments underperform [2].

• Risks
  :
  • Transparency Risk
    : Off-balance-sheet debt structures (SPVs) can lead to unexpected leverage exposure, catching investors off guard [1].
  • Valuation Headwinds
    : Firms relying on aggressive off-balance-sheet financing may face downward pressure on valuations as investors demand greater transparency [3].
  • Higher Borrowing Costs
    : Potential credit market saturation in 2026 could increase capital costs for AI infrastructure projects [2].

• Opportunities
  :
  • Market Reward for Transparency
    : Companies with clear, sustainable AI funding models may be valued more favorably as investors prioritize balance-sheet health [0][4].
  • Disciplined AI Investment
    : Increased scrutiny could drive more strategic AI spending, focusing on projects with clear return-on-investment (ROI) paths [0].

JPMorgan’s Aliaga’s warning about fraying balance sheets amid AI spending aligns with concrete market data showing record tech bond issuance, widespread off-balance-sheet debt shifting via SPVs, and Oracle’s substantial off-balance-sheet data center commitments [0-3]. AI infrastructure spending is surging to $360 billion in 2025, but rapid obsolescence requires continuous reinvestment, amplifying debt sustainability concerns [4]. Investors are increasingly prioritizing balance-sheet transparency and sustainable funding models over raw AI spending volume, signaling a shift in market sentiment towards more disciplined AI investment.