“Debt-Fueled Exuberance”: Is the $3Tn AI Boom Set to “Backfire”?

The $3 trillion global investment in AI datacenters is being described as a “debt-fueled exuberance” that some analysts worry “will backfire.” While tech valuations (Nvidia at $5tn, Microsoft at $4tn) suggest a healthy boom, the financial foundations are “raising alarm” at the Bank of England.
The concern centers on a $1.5tn “funding gap.” This is the portion of the $3tn spend not covered by Big Tech’s cash flow, which is being filled by “private credit,” a form of shadow banking. Meta has already taken $29bn from this market.
Analysts warn this “influx of debt capital” is “speculative” and poses a “structural risk to the overall global economy.” Lenders, caught in AI hype, are funding “unproven” projects “without their own customers,” using “very quickly depreciating assets” as collateral.
This “exuberance” is colliding with a harsh reality: an MIT study found 95% of organizations are getting zero return from generative AI pilots. This suggests the “lofty revenue expectations” needed to pay off this $1.5tn in debt may never materialize.
Alibaba’s chair, Joe Tsai, has warned of a “bubble,” and the Uptime Institute notes many announced datacenters “will never be built.” The $3tn question is whether the “exuberance” will backfire, causing a debt crisis, or if it’s the necessary fuel for a new economic era.