The New York Times reports:

Trillions of dollars in borrowed money have powered the A.I. boom. But now there is growing uncertainty around just how easily more money can be obtained — and how much of it will be paid back.

Those questions burst into the forefront this week when investors rapidly lost confidence in one debt-laden data center company, CoreWeave. Prices of its bonds — the company has accrued $72 billion in liabilities to operate 51 data centers — crashed, and investors placed a more than 60 percent likelihood CoreWeave would fail to meet its obligations.

Investors have sold off bonds for other A.I. giants as well, including Larry Ellison’s company, Oracle, though the price declines are not as steep as CoreWeave’s.

At the same time, Wall Street investors have been bidding up the price of some complicated financial instruments that insure corporate debt against default, such as those insuring SoftBank, the Japanese technology colossus that has borrowed heavily to bet its future on a partnership with OpenAI.

The recent market moves could spell losses for investors that own the companies’ existing bonds and could mean the companies will be forced to pay higher interest rates when they borrow again, raising the costs of their already wildly expensive A.I. projects.

The broader question is whether companies facing debt trouble like CoreWeave, Oracle and SoftBank are the industry’s weak links or are harbingers of deeper problems in the A.I. build-out. [Continue reading…]