Fears of an AI bubble originate from the use of external financing needed to pay for infrastructure investments, which may or may not pay off for the lenders.
These 6 companies are using only a small portion of their own cash reserves to invest, and using private credit for the rest. Meta is getting a $30 billion loan from PIMCO and Blue Owl for a datacenter [0], which they could easily pay for out of their own pocket. There are also many datacenters that are being funded through asset-backed securities or commercial mortgage-backed securities [0], the market for which can quickly collapse if expected income doesn't materialize, leading to mortgage defaults, as in 2008.
These 6 companies are using only a small portion of their own cash reserves to invest, and using private credit for the rest. Meta is getting a $30 billion loan from PIMCO and Blue Owl for a datacenter [0], which they could easily pay for out of their own pocket. There are also many datacenters that are being funded through asset-backed securities or commercial mortgage-backed securities [0], the market for which can quickly collapse if expected income doesn't materialize, leading to mortgage defaults, as in 2008.
[0] https://www.reuters.com/legal/transactional/meta-set-clinch-...
[1] https://www.etftrends.com/etf-strategist-channel/securitizin...