Particle.news
Download on the App Store
7 ARTICLES
·
2h ago

AI Buildout Draws Bubble Warnings Even as Spending Surges

New analysis highlights heavy AI spending financed through opaque structures with uncertain near-term payoffs.

Billboards advertising artificial intelligence companies seem to be everywhere in San Francisco, even as the threat of an AI bubble persists.
Image
Billboards advertising artificial intelligence companies are abundant in San Francisco, the epicenter of the technology. There are new concerns that the AI boom could become an economic bubble, but how would the city handle a burst bubble?
California Gov. Gavin Newsom held a press conference at the Google office in San Francisco in August to announce new AI partnerships.

Overview

  • Tech companies are expected to pour about $364 billion into AI this year, with McKinsey estimating up to $5.2 trillion needed for data centers by 2030.
  • Financing is increasingly routed through off‑balance‑sheet vehicles that shift risk to traditional investors such as REITs, raising concerns about hidden leverage.
  • A small set of hyperscalers accounts for an outsized share of market gains and capex, with Microsoft planning roughly $80 billion this fiscal year and Meta up to $72 billion, and group outlays projected to exceed $1 trillion by 2027.
  • Top voices from tech and finance, including Jeff Bezos, Sam Altman, David Solomon and Jamie Dimon, acknowledge stretched valuations and the possibility of painful losses even as investment continues.
  • Countering bubble calls, Oaktree’s Howard Marks said valuations look expensive but not manic, arguing the AI rally has not yet reached the psychology that defines true bubbles.