Credit fuels the AI boom — and fears of a bubble
Credit investors pour billions of dollars in artificial intelligence investments, just as executive officials and analysts in the industry raises questions about whether the new technology amplifies another bubble.
People who know this week said Jpmorgan Chase & Co. Mitsubishi Ufj Financial Group leads to sell more than $ 22 billion to support the Vantage Data Data Centers plan to build a huge university campus for data data. Meta Platforms Inc. Facebook father, on $ 29 billion from Pacific Investment Management Co. And Blue Owl Capital Inc. A huge data center in Louisiana countryside, Bloomberg said this month.
Many of these deals are coming. Openai alone estimates that it will need trillion dollars over time to spend on the infrastructure required to develop and operate artificial intelligence services.
At the same time, the main players in this industry admit that in the future pain of artificial intelligence investors. Openaii CEO Sam Al-Tamman said this week he sees similarities between the current frenzy of investment in artificial intelligence and the Dot-Com Baghdad in the late 1990s. When discussing startups, he said: “Someone will burn there.” The Massachusetts Institute of Technology initiative issued a report indicating that 95 % of the IQ projects in the world of companies have failed to make any profit.
In general, it is sufficient to make credit monitors nervous.
“It is natural for credit investors to think of the early first decade of the twentieth century when it can be said that telecommunications companies may be exaggerated and on borrowing and we have seen some important justifications for these assets,” said Daniel Sorrid, head of the American credit strategy for investment in Citigram. “So, the mutation of artificial intelligence certainly raises questions in the medium term about sustainability.”
Early infrastructure of the infrastructure needed to train and power the most advanced artificial intelligence models are funded by artificial intelligence companies themselves, including technology giants such as Google and Meta Platforms in Alphabet Inc. Although the money was increasingly coming from investors in bonds and private credit lenders.
Exposure here comes in many shapes and sizes, with varying degrees of risk. Many major technology companies-the so-called artificial intelligence employees-pay a new infrastructure with gold-plated debts, which are likely to be safe due to the current cash flows that secure debts, according to the latest analysis of Bloomberg Intelligence.
A lot of debt financing comes from private credit markets.
Matthew Mish, head of the UBS credit strategy, said: “Private credit financing for artificial intelligence is about $ 50 billion in the quarter, in the low end, during the past three quarters. Even without the return in MEGA and Vantage deals, they already offer two to three times the provisions of public markets,” said Matthew Mish, head of the UBS credit strategy.
Many of the new computing centers are funded by the mortgage -backed securities, not related to the company’s entity, but to the payments resulting from the complexes. The number of CMBS supported by Amnesty International’s infrastructure is 30 %, to $ 15.6 billion, out of the total full year in 2024, and JPMorgan Chase & Co. This month.
Sur Sour and his colleague in City submitted a report on August 8, focusing on the special risks of utility companies that strengthened the borrowing to build the electrical infrastructure needed to feed the powerful data centers. They and other analysts share a common concern about spending a lot of money at the present time, before artificial intelligence projects appear their ability to generate long -term revenues.
“The data center deals range from 20 to 30 years of financing for a technology that we do not even know how it will appear within five years,” said Ruth Yang, Global Special Market Officer at the S& PLOBAL Ratses. “We are conservative in our evaluation of future cash flows because we do not know how it will look, there is no historical basis.”
UBS Group indicated that stress has begun to appear in the appearance of paid loans for private credit lenders present in the field of technology. In the second quarter, the PIK income in BDCS reached the highest level since 2020, as it rose to 6 %, according to UBS.
But it is unlikely that the hose of the fire stops from the money any time soon.
“The direct lenders are constantly raising the capital, and he has to go somewhere,” said John Medina, the first vice president of the global Moody team and the task of infrastructure. “They see these excessive, with this huge need for capital, as the origin of the following long -term infrastructure.”
2025-08-24 20:38:00
