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Microsoft is turning to the bond market to raise money for its growing business needs. The company recently started spending heavily on AI, and now it has announced its plan to raise USD 25 billion through a bond sale.
It’s going to be Microsoft’s first US investment-grade debt offering in more than nine years. The sale has drawn over USD 100 billion in investor bids. This shows that investors remain keen to lend money to the tech giant. The offering is expected to close on November 4, 2026.
According to the company statement, “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.”
Microsoft plans to issue bonds with repayment periods ranging from two to 40 years. The money will mostly be invested for daily business needs, new projects, and buybacks. Even Microsoft may use it for acquisitions and paying off existing debt.
The company has a large cash reserve, so the move is not a sign of financial trouble. Instead, it gives Microsoft another way to raise money without using too much of its available cash. CFO Amy Hood has stated, “There’s a form of financing called leasing, and we’ve been using that one as a vehicle.” She further added, “We’re fortunate to have access in the debt markets, given where our ratings are, and we haven’t yet tapped that.”
Microsoft's rising spending shows how much money it takes to stay ahead in the AI race. Its capital spending reached USD 45.2 billion in the September quarter. At the same time, Azure revenue grew 48% to USD 33.17 billion. Microsoft expects Azure growth to reach 49% to 50% in the next quarter.
The main question now is whether revenue can keep up with these costs. Microsoft reported USD 18.6 billion in free cash flow for the quarter. This gives it room to keep investing, but the company must turn rising AI demand into steady income.
Strong Azure growth is a good sign, although the cost of building and running data centers remains high. However, the bigger test will be whether its AI and cloud businesses can bring in enough revenue to support this huge spending plan.