Financing the AI Boom: The Shift from Cash Flows to Debt

Financing the AI boom: from cash flows to debt [pdf]

I explore how the surging investment in AI infrastructure is forcing major IT firms to pivot from internal cash flows to external debt financing. While this boom drives significant GDP growth, it introduces financial stability risks if high earnings expectations fail to materialize, with private credit playing an increasingly vital role.

"The fact that equity prices have run far ahead of debt market pricing underscores this tension."