Jenny Johnson, CEO of Franklin Templeton, suggests that short-term debt from major cloud operators, or hyperscalers, provides a superior risk-reward profile for investors looking to gain exposure to AI infrastructure development.
Speaking at the Milken Institute Asia Summit on October 9, 2026, Johnson noted that hyperscalers have issued over $500 billion in debt throughout 2026 to finance their operations, shifting away from equity-based funding.
The strategy focuses on short-duration bonds to mitigate risks associated with rapid technological change, which makes long-term investments uncertain. Johnson highlighted that these companies maintain strong cash flows and solid balance sheets.
Johnson also warned of increasing complexity in corporate financing, as hyperscalers rely more on off-balance-sheet instruments and supplier financing. She noted that US productivity growth remains at approximately 2%, largely driven by older technologies rather than AI.
Franklin Templeton anticipates that heavy AI-related borrowing will keep interest rates and inflationary pressures elevated. The firm advises investors to monitor debt structures closely, as hidden liabilities could impact even financially strong companies.
