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Sunday, July 12, 2026

Major AI data center builders have doubled their debt in five years.

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The boom in AI data center financing is pushing more private debt into mutual funds, blurring the line between Wall Street's institutional market and retail investors. Read more in this Special Report: https://thein.fo/4aD4VRO

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-- The Information (@theinformation.com) 3:00 PM · Jul 12, 2026

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... The largest builders of artificial intelligence data centres have doubled their debt load in the last five years, turning to borrowing to finance an unprecedented spending spree they claim is needed to transform the economy.

Alphabet, Amazon. com, Meta Platforms, Microsoft and Oracle, the five biggest spenders on new data centres in the US, collectively added some $350 billion to their debt obligations in the last five years, according to data compiled by Bloomberg.

They're betting heavily that cutting-edge AI services will mean a flood of new revenue down the line. Investors have enthusiastically backed the companies, snapping up new bonds issued in a variety of currencies. But buyers gave an unusually chilly reception this week to a $25 billion issuance from Amazon, people familiar with the matter told Bloomberg, a sign that there's a limit to the amount of money available to back investment from the tech giants. ...


#1 | Posted by LampLighter at 2026-07-11 03:27 AM | Reply

The question that lingers in the air, much like an unclaimed air biscuit, is...

Where is the revenue to substantiate that level of debt increase?


#2 | Posted by LampLighter at 2026-07-11 03:28 AM | Reply

They're betting heavily that cutting-edge AI services will mean a flood of new revenue down the line. I

One of the main drivers of the bubble (by my understanding) is this debt without the likelihood of returns sufficient to generate the revenue needed to overcome the debt load.

It almost seems like we're seeing a bubble as an explicit corporate strategy.

#3 | Posted by jpw at 2026-07-11 09:09 AM | Reply

It's an arms race to training the best reasoning models. The ones from 5 years ago are trivial compared to the ones everybody uses now. These will be trivial in another 5 years.

#4 | Posted by sitzkrieg at 2026-07-11 12:47 PM | Reply

These will be trivial in another 5 years.

#4 | POSTED BY SITZKRIEG

Because the Singularity is ever nearer.

And cannot be stopped.

#5 | Posted by donnerboy at 2026-07-11 12:50 PM | Reply

That'd be a pretty good reasoning model if you thought it was self aware, but more like mostly automated office tasks with modest business rules for gating.

#6 | Posted by sitzkrieg at 2026-07-11 02:10 PM | Reply

If you think AI is just about automated office tasks then you haven't been paying attention.

AI's reach extends far beyond basic "office tasks" because it handles complex workflows, accelerates physical and digital problem-solving, and increases the overall speed of tasks with less human error.

Instead of just drafting emails or sorting data, advanced systems will coordinate projects, analyze deep patterns, and drive major operational shifts. There is even an AI running its own business in SF now.

"Luna / Andon Market: An autonomous AI agent given a budget and lease to run a real storefront in San Francisco."

Stories like this are popping up nearly every day now.

"A pair of humanoid robots crossed a major medical milestone this week after successfully performing gallbladder removals in pigs for the first time ... "

The Singularity is Nearer.

In fact, it's my belief that we may have already crossed the "event horizon".

#7 | Posted by donnerboy at 2026-07-11 02:23 PM | Reply

I'm sitting here watching gpt 5.6 sol agent orchestrate 5.5 agents over a websocket backend I made so they could communicate, while another chat is doing a model tournament on 7.2 million skus to answer a question I had. I compete in data science showcases. I'm a judge for AI competitions. I'm probably a little closer to this one than you.

#8 | Posted by sitzkrieg at 2026-07-11 04:26 PM | Reply

Glorified Adding Machines. They cannot Reason or extrapolate anything.

An Ant is far more intelligent.

Any living organism is.

GIGO.

Which is not the case with living Brains.

AI is a bubble,really, just a scam.

It's days are Numbered.

#9 | Posted by Effeteposer at 2026-07-11 06:09 PM | Reply

__________
#7 | Posted by donnerboy at 2026-07-11 02:23 PM
If you think AI is just about automated office tasks then you haven't been paying attention.

Today's "AI" is, mostly automation.


AI's reach extends far beyond basic "office tasks" because it handles complex workflows, accelerates physical and digital problem-solving, and increases the overall speed of tasks with less human error.

Instead of just drafting emails or sorting data, advanced systems will coordinate projects, analyze deep patterns, and drive major operational shifts. There is even an AI running its own business in SF now.

"Luna / Andon Market: An autonomous AI agent given a budget and lease to run a real storefront in San Francisco."

That sounds like a really lovely marketing material template of almost any "AI" prospectus.

www.businessinsider.com - Claude Code's creator says his setup involves thousands of AI sub-agents doing 'deeper work' overnight - 2026-05-13

|------ Anthropic engineer Boris Cherny says his coding setup now involves "a few thousand" AI agents working for him overnight.

Cherny, the creator of Claude Code, described his AI workflow during an interview with Sequoia Capital on May 4.

His answers - including how he mostly runs the agents via his phone - highlighted how some Silicon Valley engineers are beginning to use AI systems less like chatbots and more like always-on autonomous assistants.

Cherny said he relies heavily on two Claude Code features built for persistent automation: /loops and Routines.

He said users can schedule /loops locally via cron, while Routines run recurring tasks on a server, allowing engineers to keep agents working after their laptops are closed. ...
-------|



Stories like this are popping up nearly every day now.

Yes, of course. There are also "stories" nearly every day that don't make it into popular, mainstream press.


"A pair of humanoid robots crossed a major medical milestone this week after successfully performing gallbladder removals in pigs for the first time ... "

Intuitive Surgical's DaVinci robots (and their copycats) are old news and have been on the market since early 2000s; if you have seen phrase "minimally invasive surgery" it most likely refers to all kinds of robot-assisted medical procedures, from head to toes.
"In 2012, it was used in an estimated 200,000 surgeries, most commonly for hysterectomies and prostate removals."

And robotics may or may not include AI, but often confused with AI because most are usually consumer-facing, even if it's as simple as Roomba.


The Singularity is Nearer.

Yes, every day, by definition... but none of what you posted before is even remotely close to Singularity, or much beyond automation of previously "manual" tasks.

In fact, most of what was described in that 'prospectus' I could run much cheaper on a network years ago with a logic module, few scripts and not very sophisticated task scheduler, with or without ERP or "supervising" the process.

I didn't call it AI.
__________

#10 | Posted by CutiePie at 2026-07-12 07:52 PM | Reply

Will the revenue generated by AI catch up to the CapEx for the hyperscalers?


They currently seem to be losing money on every transaction, but hope to make up for it with volume ...

#11 | Posted by LampLighter at 2026-07-12 08:16 PM | Reply

__________
#11 | Posted by LampLighter at 2026-07-12 08:16 PM
They currently seem to be losing money on every transaction, but hope to make up for it with volume ...

They are not necessarily losing money on every transaction because defining "transaction" in AI is very complex and involves many different, non-uniform costs.

However, they are losing a lot of money because the costs are huge, and they will definitely need a lot of subscription volume and high revenue growth to pay for their infrastructure, recurring expenses and continuous upgrades.

That's how it usually works in the early stages.


Will the revenue generated by AI catch up to the CapEx for the hyperscalers?

Depends on who you ask - early/mid-rounds investors, founders and companies accountants, sell-side analysts, buy-side analysts, critics of technology, critics of financial structure, competition, etc. - and answers may depend on knowledge and assumptions, but also on what their financial incentives are.
__________

#12 | Posted by CutiePie at 2026-07-12 08:57 PM | Reply

@#12 ... They are not necessarily losing money on every transaction because defining "transaction" in AI is very complex and involves many different, non-uniform costs. ...

The cost of AI tokens (cost per transaction) has risen significantly.

Palo Alto CEO Arora says AI pricing needs to fall 90% as token costs skyrocket
https://www.cnbc.com/2026/07/09/palo-alto-ceo-arora-ai-pricing.html

... Palo Alto Networks CEO Nikesh Arora told CNBC on Thursday that high token costs need to come down as much as 90% to promote enterprise adoption ...

Rising token costs have emerged as a major pain point for businesses and put a strain on AI budgets. The current pricing, he said, makes AI tools increasingly difficult for businesses to implement. ...


... also, related ...

www.theregister.com

... To put some of these capex forecasts in perspective, I think Amazon is saying that it's planning north of two hundred billion in AI build outs this year. Microsoft's looking at one hundred and ninety billion. Google a hundred and eighty billion. Meta one hundred and forty billion. I mean this is a lot of money being tossed around for potentially no returns, right? ...

How the AI bubble could pop and take down the global economy, according to the BIS
www.theregister.com

... The central bank for central banks is concerned about the eye-watering sums being invested into AI, and it's raising the specter of a global recession should the bubble burst.

In its annual report for 2026, the Bank for International Settlements compared the current craze to historical events, including canal and British railway mania in the 1800s, electrification exuberance of the 1920s, and the dotcom boom of the 1990s.

The report states: "all shared one common trait: a genuine technological breakthrough that attracted capital in excess of what commercial returns could ultimately justify. ...



Will the AI craze burst? I hope not.

But I cannot predict the future ...



#13 | Posted by LampLighter at 2026-07-12 09:16 PM | Reply

__________
#13 | Posted by LampLighter at 2026-07-12 09:16 PM
The cost of AI tokens (cost per transaction) has risen significantly.


Cost of AI token is NOT the cost per transaction. - see drudge.com

* 18% of organizations now orchestrating multiple agents across workflows, up from 9% in the previous period
* A $0.04 chat can become a $1.20 orchestration when it requires tool retrieval, planning and subagents
* AI coding costs are expected to surpass average developer salaries by 2028
* Despite enterprises spending an average of $11.5 million on AI in 2026, most struggle to demonstrate any clear return on investment.

* Recent tests have shown Chinese models to be much cheaper "per task" (not necessarily per token) and do almost as good a job as best US models, like Mythos, that run on more advanced hardware.


Nor does it matter how much money you make "per transaction" (however you want to define it), if you don't have enough of them (volume) to make a profit based on your costs structure - it's basic economics... hence, as I posted:

They are not necessarily losing money on every transaction because defining "transaction" in AI is very complex and involves many different, non-uniform costs.
However, they are losing a lot of money because the costs are huge, and they will definitely need a lot of subscription volume and high revenue growth to pay for their infrastructure, recurring expenses and continuous upgrades.

"Cost per transaction" is just one, poorly chosen, unit of many factors in trying to evaluate whether "Will the revenue generated by AI catch up to the CapEx for the hyperscalers?"
__________

#14 | Posted by CutiePie at 2026-07-12 09:52 PM | Reply

@#14 ... Cost of AI token is NOT the cost per transaction. ...

The AI token is what is being used to charge companies for their usage. Maybe it is a single transaction, maybe it is a request. Regardless, rising token costs have emerged as a major pain point for businesses and put a strain on AI budgets, leading some CEOs to question whether or not the use of AI is worth it.

The question in my mind currently is...

Will AI's huge CapEx debt ever be recovered?

And then, debt aside, there are things like ...

Data centres account for almost a quarter of Irish electricity usage in 2025
www.irishtimes.com

So, aside from the increasing debt burden, then is also the operational cost burden.


#15 | Posted by LampLighter at 2026-07-12 10:02 PM | Reply

__________
#15 | Posted by LampLighter at 2026-07-12 10:02 PM
The question in my mind currently is...
Will AI's huge CapEx debt ever be recovered?

The same question you asked before?

Depends on who you ask. See #12


And then, debt aside, there are things like ...
Data centres account for almost a quarter of Irish electricity usage in 2025
So, aside from the increasing debt burden, then is also the operational cost burden.

Yes, it's called infrastucture and every company has operational costs. See #14.
__________

#16 | Posted by CutiePie at 2026-07-12 10:34 PM | Reply

@#16 ... Depends on who you ask. ...

So, no one really seems to know. That's what I figured.

... Yes, it's called infrastucture and every company has operational costs. ...

Yes, every company has operational costs. Duh.

But, and it is a big Trump-sized but... the operational costs of AI are quite significant. Starting with electrical and water usage costs.

Again, will the revenue be able to catch up? I'll say again, I cannot predict the future.



#17 | Posted by LampLighter at 2026-07-12 10:46 PM | Reply

Analysis: The next killer AI feature? No AI at all
www.computerworld.com

... As artificial intelligence creeps into every corner of our lives, an absence of AI may soon be a premium experience worth paying for. ...

AI may well be creating a killer feature that people will be willing to pay to possess. It's just not the one most AI-fixated entities are focused on creating -- quite the opposite, in fact. ...

That, in turn, is creating a whole new category of productivity experience that people are actually lining up to pay for -- a premium feature of sorts, related to AI and its presence in our lives.

Ready for the most delicious irony of all? The killer AI feature of which we speak is a lack of AI -- or at least the ability to disable and avoid it and use it only if and when you want. ...


#18 | Posted by LampLighter at 2026-07-12 10:49 PM | Reply

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