Credit investors are pumping massive amounts of money into artificial intelligence projects, even as top executives warn of another tech bubble similar to the dot-com crash of the late 1990s.
Record-Breaking Deals Signal AI Investment Frenzy
Major banks are leading some of the biggest infrastructure deals in recent history. JPMorgan Chase and Mitsubishi UFJ Financial Group are arranging a loan worth more than $22 billion to support Vantage Data Centers‘ plan to build a massive data center campus. Similarly, Meta Platforms (Facebook’s parent company) secured $29 billion from Pacific Investment Management Co. and Blue Owl Capital Inc. for a large data center project in rural Louisiana.
These deals are just the beginning. OpenAI, the company behind ChatGPT, estimates it will need trillions of dollars over time to build the infrastructure required for artificial intelligence services.
OpenAI’s Trillion-Dollar Infrastructure Vision
OpenAI CEO Sam Altman has made the most ambitious spending announcement in the AI industry. “You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future,” Altman told reporters. He compared this massive infrastructure buildout to “building highways for AI to run smoothly” – essential digital roads that will power the next generation of artificial intelligence.
The company’s CFO, Sarah Friar, explained that this infrastructure spending is like “the railroads or the buildout of electricity” rather than the internet, which was relatively inexpensive to build. “The internet, it turns out in hindsight, was actually a relatively capex-light buildout. I think we are just getting started,” Friar said.
OpenAI is currently generating about $1 billion per month in revenue, but the company faces a constant shortage of computing power. “The biggest thing we face is being constantly undercompute,” Friar revealed. This shortage is driving their massive spending plans.
To finance these enormous costs, Altman says OpenAI is working on “a very interesting new kind of financial instrument for finance and compute that the world has not yet figured out”. The company is also exploring partnerships where it might eventually rent out its AI infrastructure to other businesses, similar to how Amazon built Amazon Web Services.
The Stargate Project: $500 Billion Infrastructure Plan
OpenAI’s most ambitious project is Stargate, a joint initiative with SoftBank that plans to invest $500 billion over four years to build AI infrastructure in the United States. The project will start by deploying $100 billion immediately, with construction beginning in Texas.
However, reports suggest the Stargate project has faced delays, with fundraising yet to begin despite the January announcement.
Tech Leaders Sound Alarm Bells
Despite leading the investment boom, Altman himself is warning of bubble risks. He warned this week that he sees similarities between today’s AI investment rush and the dot-com bubble of the late 1990s. Speaking about startup valuations, Altman said, “someone’s gonna get burned there” and described current startup valuations as “insane” and fueled by “irrational behavior”.
Adding to these concerns, a Massachusetts Institute of Technology study found that 95% of generative AI projects in companies have failed to make any profit.
Where the Money Is Coming From
Initially, big tech companies like Google and Meta funded AI infrastructure using their own money. However, the funding landscape has shifted dramatically.
Private credit markets are now the primary source, providing around $50 billion per quarter for AI projects – two to three times more than public markets are providing, according to Matthew Mish, head of credit strategy at UBS.
Another significant funding source is commercial mortgage-backed securities (CMBS), where loans are tied directly to data center buildings rather than companies. JPMorgan Chase estimates that CMBS backed by AI infrastructure has already jumped 30% in 2025, reaching $15.6 billion.
Other major tech companies are also spending heavily: Microsoft plans to spend $80 billion on AI data centers this fiscal year, while Meta expects to invest up to $72 billion in AI-related operations.
Why Experts Are Worried
Financial analysts are drawing parallels to past technology crashes. “It’s natural for credit investors to think back to the early 2000s when telecom companies arguably overbuilt and overborrowed and we saw some significant writedowns on those assets,” said Daniel Sorid, head of U.S. investment grade credit strategy at Citigroup.
The main concerns include:
- Long-term commitments for uncertain technology: Data center deals involve 20 to 30-year funding periods for technology that may look completely different in just five years
- No proven revenue model: Ruth Yang from S&P Global Ratings noted, “We are conservative in our assessment of forward cash flows because we don’t know what they will look like, there’s no historical basis.”
- Rising risky loans: Payment-in-kind loans to tech-oriented private credit lenders reached their highest level since 2020 in the second quarter, climbing to 6%
- Massive scale of spending: The trillions of dollars being planned for AI infrastructure dwarf previous technology buildouts, raising questions about whether demand will justify such enormous investments
Market Impact and Utility Companies
The AI boom is also affecting utility companies, which have increased borrowing to build electrical infrastructure for power-hungry data centers. These facilities require enormous amounts of electricity, creating a new burden on power grids across the country.
Investment Continues Despite Warnings
Despite the warnings, money continues flowing into AI projects. “Direct lenders are constantly raising capital, and it has to go somewhere,” said John Medina, senior vice president in Moody’s Global Project and Infrastructure Finance Team. “They see these hyperscalers, with this massive capital need, as the next long-term infrastructure asset”.
Altman remains confident about the spending, saying, “It’s very rational for us to keep investing right now,” and that society is unlikely to regret pouring money into AI.
While AI technology shows genuine promise, the current investment pace – led by OpenAI’s trillion-dollar infrastructure plans – has created what many experts consider dangerous territory. The combination of massive financial commitments, unproven revenue streams, and historical precedents of tech bubble bursts has put the financial community on high alert.
As Altman put it, economists will “wring their hands and say, ‘This is so crazy, it’s so reckless,'” but OpenAI plans to “just be like, ‘You know what? Let us do our thing'”. Whether this confidence will pay off or lead to massive losses remains to be seen as the AI infrastructure buildout accelerates.
