Microsoft to raise $25 billion in debt to fund AI expansion despite record revenue and 60,000 employee buyout offers

Microsoft is preparing to borrow $25 billion to support its growing AI infrastructure ambitions, just three days after offering voluntary buyouts to roughly 60,000 employees. The timing raises a bigger question about the AI boom: How much money will even the world’s richest technology companies need to keep building?

The Redmond-based software giant announced the pricing of a $25 billion bond offering on Thursday, October 29, following quarterly earnings that showed little sign of financial weakness. Microsoft’s revenue reached $92.28 billion in its first fiscal quarter of 2027, up 19% from a year earlier and ahead of Wall Street’s $90.63 billion estimate. Net income climbed to $36.6 billion.

Yet strong earnings no longer cover the scale of infrastructure investments Microsoft is pursuing.

The company has outlined plans for approximately $175 billion in calendar-year 2026 capital expenditures, including finance leases, as it races to add data center capacity, AI chips, and computing resources for customers such as OpenAI and Anthropic.

The latest borrowing marks Microsoft’s first U.S. investment-grade bond sale in more than nine years, Reuters reported. Investor appetite appears strong. The offering attracted more than $100 billion in orders, roughly four times the amount Microsoft intends to raise, Reuters reported, citing a person familiar with the transaction.

Microsoft’s AAA credit rating gives it access to some of the most favorable borrowing conditions available to corporations.

Microsoft turns to debt markets as AI costs soar

The $25 billion offering consists of 10 tranches of senior unsecured notes, with maturities stretching from 2028 to 2066. Microsoft expects to close the transaction on November 4.

“Microsoft intends to use the net proceeds from the offering for general corporate purposes,  which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt. The offerings are expected to close on November 4, 2026,” Microsoft said in a statement.

Microsoft said the proceeds could support working capital, capital expenditures, share repurchases, acquisitions, or repayment of existing debt. The company has not designated the entire offering exclusively for AI projects.

The financing comes as AI infrastructure spending reshapes how technology companies manage their balance sheets.

Microsoft Chief Financial Officer Amy Hood told analysts Wednesday that the company would consider additional financing when market conditions made borrowing attractive, CNBC reported.

“We’re fortunate to have access in the debt markets, given where our ratings are, and we haven’t yet tapped that,” Hood said during the earnings call.

The strategy reflects a broader change across Big Tech. Amazon, Alphabet, and Oracle have turned to debt markets to help finance data centers and cloud infrastructure. Oracle recently outlined plans to raise another $10 billion.

The financial pressures extend far beyond purchasing Nvidia GPUs.

A WIRED investigation into AI infrastructure found that proposed natural-gas projects linked to major technology companies, including Microsoft, could create significant emissions if built and operated at their permitted capacity. The findings illustrate another costly challenge facing the industry: securing enough electricity to keep AI facilities running.

For Microsoft, access to capital may be relatively straightforward. Turning that capital into productive infrastructure, and eventually profitable AI services, presents a different challenge.

Strong profits, employee buyouts, and a growing AI spending bill

The timing of Microsoft’s bond offering is particularly striking. On Monday, October 26, the tech giant announced voluntary buyout offers covering approximately 60,000 employees, nearly 27% of its global workforce. According to the announcement, eligible employees include workers in AI experiences, Copilot, finance, human resources, Xbox, and Windows and Devices. The program spans participating teams in the United States, Canada, the United Kingdom, and India.

The offers are voluntary. They do not mean Microsoft is eliminating 60,000 jobs, and the company has not disclosed how many employees it expects to accept. Still, the juxtaposition is difficult to ignore. Microsoft is looking to control workforce costs even as it commits extraordinary sums to AI infrastructure.

The company remains in a stronger cash position than several of its technology rivals. Reuters reported that Microsoft expects to maintain positive free cash flow through its fiscal year ending June 2027. Alphabet and Meta, meanwhile, have reported periods of negative free cash flow tied to heavy investment spending.

That distinction matters. Microsoft is not borrowing $25 billion out of immediate financial distress. It is using its credit strength to secure financing and preserve flexibility for future investments.

Yet the larger question remains unanswered.

Microsoft and its competitors are betting that demand for AI computing will eventually justify the extraordinary cost of building the infrastructure behind it. Rising cloud revenue suggests customers are buying more capacity, but investors will be watching how efficiently that spending turns into lasting profits.

For now, Microsoft’s latest bond offering sends a message about the economics of artificial intelligence: Even a company generating more than $92 billion in quarterly revenue is turning to borrowed money to help finance its next phase of growth.

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