As anxiety over an artificial-intelligence bubble reached a fever pitch in recent months, no Wall Street bank helped the industry power past the noise like Morgan Stanley.
The firm has led or co-led some $65 billion in corporate bond deals for data centers or other AI investments since October, more than any other large US bank, according to data compiled by Bloomberg. That included novel financing structures for its efforts which have spanned Meta Platforms Inc.’s Hyperion facility in rural Louisiana to junk bond offerings for lesser-known cryptominers like TeraWulf Inc.
The bank’s AI effort — and a strategic push into debt capital markets — has helped Morgan Stanley increase its share in arranging US investment grade bond deals. Excluding self-led deals, it’s ranked third this year, up from fourth last year, according to Bloomberg league table data. Its market share on that basis has increased by about two percentage points.
Cloud computing giants will spend some $3 trillion by 2028 to fuel the AI boom, an infrastructure overhaul partially financed by debt, Morgan Stanley’s strategists predict. But some investors fear an AI bubble amid questions about the profitability of the unprecedented capital injection, and have hinted they’re bumping up against their limits for absorbing the wave of debt into 2026.
For now, though, Morgan Stanley is counting its wins. In a landmark October deal, Morgan Stanley arranged more than $27 billion of debt for a special purpose vehicle that allowed Meta to fund Hyperion off balance sheet, preserving the firm’s credit ratings. The bank also secured billions in orders for bonds sold by little-known crypto-mining firms TeraWulf and Cipher by attaching a never-seen-before financial backstop from Google to the deals.
“Innovation, over the last 20 years, has tended to skew to the ECM market,” Evan Damast, the bank’s global co-head of capital markets, said in an interview. “That pendulum has swung, over the last 10 years, whereby the scale of innovation and creativity in the credit markets has dwarfed that of the equity markets.”
Alongside Citigroup Inc., Morgan Stanley was a bookrunner on Meta’s $30 billion bond sale in October which drew record-levels of interest. It also had a role alongside other banks on bond deals for Alphabet Inc. and Amazon.com Inc., which, like Meta, are spending billions on AI infrastructure.
In anticipation of the looming demand, Morgan Stanley Co-President Dan Simkowitz gathered some of the largest energy firms, technology companies and alternative asset managers last summer for an event dubbed “Power Palooza.” The discussions in Menlo Park, California centered around powering AI, and how to finance that. Morgan Stanley also recently combined its global energy team with its power and utilities group to bolster coverage for those clients.
The bank has seized on the private credit boom as well. For the Hyperion transaction, Morgan Stanley ran a competitive process that saw Blue Owl Capital Inc. beat other asset managers and infrastructure lenders to the deal, alongside Pacific Investment Management Co. And before bringing Google into the fray for TeraWulf, Morgan Stanley also looked to private credit for a deal.
But concerns are mounting as the money pours in. This month, the cost to protect hyperscaler Oracle Corp.’s debt from defaulting reached its highest levels since 2009, underscoring investor angst over the gap between AI investments and their future profits. Oracle also reported an escalation in spending on data centers and other equipment, causing its shares to tank.
Financial players — including Morgan Stanley — are alert to the risks. The bank has considered offloading some of its data-center exposure, Bloomberg reported this month.
Still, the recent debt deals are sure to pad the bank’s reputation as a go-to firm for the tech industry. Morgan Stanley grabbed the lead for tech IPOs so far this year, and has a long-standing relationship with Elon Musk that included advising his xAI in its corporate debt raise in June.
“We have banked many of these clients since their inception,” Anish Shah, global head of debt capital markets at Morgan Stanley, said. “Now, they’re mega-cap hyperscalers. Those relationships are very deep.”
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