Weak links start to show in AI borrowing
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The recent market moves could mean the companies will be forced to pay higher interest rates when they borrow again.
PHOTO: REUTERS
Maureen Farrell and Rob Copeland
- AI borrowing is under pressure as investors lose confidence in debt-heavy firms like CoreWeave, Oracle and SoftBank. Bond prices have fallen and borrowing costs are rising.
- CoreWeave’s model looks risky because it must pay for chip and data centre costs before tenants arrive. Its bonds yield over 15%, and its stock fell 24%.
- Oracle’s projects face permit and power delays, while SoftBank has taken on more debt for OpenAI. Some investors warn of deeper AI financing problems, though others see existing assets gaining value.
AI generated
Trillions of dollars in borrowed money have powered the artificial intelligence boom. But now there is growing uncertainty around just how easily more money can be obtained – and how much of it will be paid back.
Those questions burst into the forefront last week when investors rapidly lost confidence in one debt-laden data centre company, CoreWeave.