Credit rating agency highlights uncertainty over $27 billion in AI-driven investments funded by experimental debt structures.
Moody’s Ratings has raised concerns over the lack of a clear roadmap for returns on the billions invested in AI infrastructure, including chip production and data centers. The agency notes that much of the $27 billion in capital expenditure is underpinned by debt, with issuers employing unconventional financing methods amid uncharted territory for such large-scale investments.
The surge in AI-related spending has become a key driver of U.S. economic and stock market growth, with tech stocks and algorithm-driven funds heavily exposed. However, stakeholders increasingly question whether the technology can generate sufficient returns to justify the debt-fueled expansion, particularly as private credit deals proliferate.
Morgan Stanley and other institutions are structuring tens of billions in bonds to fund AI startups, but the experimental nature of these deals adds to the uncertainty. Moody’s Senior Vice-President Raj Joshi emphasized the absence of a proven playbook for such investments, signaling potential risks ahead.