Microsoft raises $25B in its first US bond sale since 2017 to fund AI infrastructure

Microsoft is borrowing $25 billion in its first US bond sale since 2017 to pay for AI infrastructure. The timing follows a strong quarter: Azure grew 48% to $33.17 billion, and remaining performance obligations (contracted revenue not yet recognized) rose 73% to $677 billion.

The shift matters because Microsoft has long funded capital spending from cash flow. Turning to debt signals that AI build-out costs now exceed even its internal cash generation. Coverage also notes the irony of borrowing for AI shortly after offering buyouts to tens of thousands of employees.

Microsoft joins Oracle, which is raising $20B, OpenAI's $20B round and Anthropic's near-trillion-dollar commitments in a week defined by financing the compute race. The $677B backlog suggests customer demand is real rather than speculative.

On the same day, Microsoft and Lumen expanded their co-selling partnership to bring Lumen's cloud networking into Azure for enterprise AI workloads. Things to watch: the bond's pricing and credit spreads as a market read on AI capex risk, and whether more hyperscalers follow Microsoft into debt markets.