Tech giants are amassing record debt to fuel a massive AI infrastructure race, with Meta, Microsoft, Amazon, and Google collectively spending $112 billion in the third quarter of 2025 alone a 77% increase from the previous year. This surge has raised alarms among financial regulators, who warn of a potential market bubble if AI investments fail to generate sufficient returns. Bank of England Governor Andrew Bailey cautioned that equity valuations for AI-focused tech firms appear stretched, highlighting the risk of a market correction if expectations sour.
A banking consortium led by Sumitomo Mitsui Banking Corp., BNP Paribas, Goldman Sachs, and Mitsubishi UFJ Financial Group is providing an $18 billion loan for a data center campus in New Mexico, part of Oracle and OpenAI’s $500 billion Stargate initiative. The loan, priced at 2.5 percentage points above the secured overnight financing rate with a four-year maturity, underscores the sector’s growing reliance on complex financing structures, including special purpose vehicles and asset-backed securities.
Despite the capital influx, monetization remains a challenge. Only about 3% of consumers are currently willing to pay for AI services, and critics point to circular financing patterns, where hyperscalers invest in AI firms that then spend on their cloud and hardware. Analysts project that private lenders will need to supply $800 billion over the next two to three years to meet the sector’s capital demands, as tech firms exhaust their cash reserves and turn to increasingly creative financing solutions.
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