Why is Microsoft raising $25 billion in debt when it already has $76.8 billion in cash?

Microsoft has raised $25 billion through a major bond offering, despite holding billions of dollars in cash, as the technology giant prepares for another phase of investment in artificial intelligence and cloud infrastructure.

The bond sale marks Microsoft's return to the US investment-grade debt market for the first time since 2017. The company has priced senior unsecured notes with maturities stretching from 2028 to 2066 and fixed interest rates reaching 6.35%. However, Microsoft has not said that the entire amount will be spent on AI. The proceeds are intended for general corporate purposes, including capital expenditure, acquisitions, share buybacks and repayment of existing debt.

Why Is Microsoft Borrowing $25 Billion Despite Having Billions In Cash?

Microsoft reported $76.8 billion in cash, cash equivalents and short-term investments as of June 30, 2026.

So why borrow?

The answer lies partly in the enormous cost of building AI infrastructure. Data centres require expensive servers, advanced processors, networking equipment, land and electricity infrastructure. Microsoft is expanding its Azure cloud business while integrating AI capabilities into products such as Microsoft 365 and Copilot. These services require substantial computing capacity. By issuing bonds, Microsoft can access additional funding without immediately using as much of its existing cash reserves. It also gets greater flexibility to manage investments, acquisitions and shareholder returns.

AI Spending Is Pushing Big Tech Towards Debt Markets

Microsoft is not alone in turning to borrowing as technology companies expand their AI infrastructure.

Alphabet reportedly raised $25 billion through a bond offering in August. The wider industry is committing enormous sums to data centres, cloud computing and advanced AI systems. The challenge is that companies must spend heavily on infrastructure before they can fully recover those investments through subscriptions, cloud services and AI products. This raises an important financial question: how quickly will revenue from AI justify the enormous cost of building the infrastructure behind it?

Microsoft Bond Sale: Interest Rates Reach 6.35%

Microsoft's $25 billion offering includes multiple bond tranches with different repayment dates. The fixed-rate notes carry annual interest rates ranging from 4.85% for bonds maturing in 2028 to 6.35% for those maturing in 2066.

The company is also issuing floating-rate notes, whose interest payments can change over time. Investor demand has reportedly been strong, with orders exceeding $100 billion, considerably higher than the amount Microsoft plans to raise.

The offering is expected to close on November 4. For Microsoft, the deal provides long-term financing flexibility. For investors, it highlights how even some of the world's wealthiest technology companies are using debt markets to support their growing financial commitments.