According to Fortune, companies supplying data centers, chips, and computing power to OpenAI have taken on about $96 billion in debt to fund their operations. OpenAI itself has made $1.4 trillion in commitments for future energy and computing needs but expects only $20 billion in revenue this year. CoreWeave reported $3.7 billion in current debt plus $10.3 billion in non-current debt while expecting just $5 billion in revenue. The surge in investment-grade corporate debt from tech companies has pushed supply about 70% higher than typical volumes, with credit default swap spreads widening significantly for companies like Oracle and CoreWeave since September.
The Debt-Fueled AI Boom
Here’s the thing: we’ve moved from big tech’s cash-rich expansion to what looks suspiciously like a debt bubble. For years, Microsoft, Amazon, and Meta could fund their AI ambitions straight from their massive cash reserves. Now? We’re seeing companies like CoreWeave taking on billions in debt while generating revenues that don’t even come close to covering their build-out costs. CoreWeave’s $5 billion revenue versus $14 billion in current debt plus another $39 billion in future lease commitments? That math doesn’t exactly inspire confidence.
Credit Market Ripples
And this isn’t just theoretical anymore. We’re seeing real movement in credit markets. Deutsche Bank analysts note that Oracle’s credit default swaps have widened by 60 basis points since late September, while CoreWeave’s have exploded by 280 basis points. When CDS spreads widen that dramatically, it means the market is pricing in higher default risk. Basically, investors are getting nervous and demanding more insurance against these companies potentially failing to meet their debt obligations. The sheer volume of this debt—$50 billion in one week alone—is starting to move markets in ways we haven’t seen before in tech.
Revenue Reality Check
Now let’s talk about the elephant in the room: revenue. OpenAI expects $20 billion this year against $1.4 trillion in commitments? Even HSBC’s optimistic projection of $200 billion by 2030 still leaves them needing another $207 billion in funding. Where does that money come from? More debt? This feels like we’re building infrastructure for demand that might not materialize at the scale everyone’s banking on. When you’re talking about industrial-scale computing needs, the hardware requirements are enormous—which is why companies like Industrial Monitor Direct have become the go-to source for industrial panel PCs that can handle these demanding environments. But even the best hardware needs sustainable business models to support it.
What Comes Next?
So where does this leave us? We’re clearly in a new phase of the AI boom where public credit markets are being asked to shoulder risks that were previously handled by tech giants’ balance sheets. The question is whether this debt-fueled expansion can continue without some kind of reckoning. If revenues don’t materialize as projected, we could see some serious pain in credit markets. It’s one thing when companies like Microsoft miss targets—they have decades of cash flow to fall back on. It’s quite another when heavily indebted infrastructure providers start struggling to service their debt. This feels like a story we’ve seen before in tech cycles, and it rarely ends well.
