Franklin Templeton CEO Favors Short-Term Tech Debt for AI Exposure

Franklin Templeton CEO Jenny Johnson said short-maturity debt from major technology companies may give investors exposure to artificial intelligence infrastructure while limiting the risks of rapid technological change and longer-term interest-rate exposure.

Johnson made the remarks in Singapore on Oct. 9 during the Milken Institute Asia Summit. She cited a 9% yield on two-year technology-company debt.

“Going longer-term on those would be a little bit more scary for me,” Johnson said. “But you know, two-year paper at nine, pretty dang good!”

Johnson said decade-long investments can be harder to assess because advances in technology may change the outlook for the companies and infrastructure involved. She also said U.S. productivity growth was about 2%, with much of that improvement tied to technologies adopted over the past two decades rather than artificial intelligence.

Franklin Templeton’s research estimates approximately $500 billion in hyperscaler-related financing over a multiyear period. The estimate includes funding beyond traditional corporate bonds, such as private credit, project finance, securitizations, infrastructure vehicles and other structures linked to assets and cash flows.

The firm also identified approximately $186 billion in high-yield, leveraged-loan and private-credit issuance, along with another $150 billion in asset-backed and commercial mortgage-backed securities issuance. The financing supports data-center construction and the chips used in AI systems, including graphics-processing units and tensor-processing units.

Examples include a $4.6 billion refinancing for QTS, a $3.25 billion financing tied to a Louisiana data-center project supported by a Google guarantee, and a $27.3 billion financing for Meta’s Hyperion facility in Louisiana.

“The AI story has not played out at all in sectors and traditional businesses. That is to come,” Johnson said.

The Milken Institute Asia Summit ran from Oct. 7–9 at the Four Seasons Hotel in Singapore. Johnson was listed among the event’s featured speakers.