The rapid expansion of artificial intelligence infrastructure has led to a dramatic increase in debt, with nearly $96 billion borrowed as companies and investors race to capitalize on AI's transformative promise. At the heart of this financial surge is OpenAI, based in San Francisco, which has become a pivotal player in the ongoing investment frenzy. Major partners such as Oracle, CoreWeave, and Elon Musk's xAI have all secured substantial loans and funding to expand their data centers and cloud services. This trend highlights the high-risk, high-reward nature of current AI investments, even as some experts caution about the dangers of excessive borrowing and unpredictable market shifts.
Oracle, a significant force in cloud computing, has come under the microscope for its heavy dependence on OpenAI to drive future revenues. The company’s latest financial results showed that nearly all of its growth in long-term contract value was linked to OpenAI. Investment firm DA Davidson recently lowered Oracle’s stock price target from $300 to $200, expressing concerns that OpenAI’s massive commitments to other providers have left Oracle vulnerable, describing the company as “a pawn in the grand game of fake it 'till you make it.” In response, Oracle’s stock dropped by over 9% in a single week, reflecting broader market unease about the sustainability of its AI-fueled growth.
The surge in borrowing isn’t limited to industry giants. CoreWeave, a data center operator, secured a $7.5 billion credit line from Blackstone and Magnetar in May 2024, underscoring the growing influence of private credit in funding AI infrastructure. According to Morgan Stanley, private lenders could provide more than half of the estimated $1.5 trillion needed for data center construction by 2028. However, CoreWeave’s explosive growth has come with challenges: while third-quarter revenue soared by 130% to $1.36 billion, its operating profit was nearly cut in half, and interest payments tripled. Some critics argue that CoreWeave’s financial strategies resemble the risky practices that led to the 2008 financial crisis, with Magnetar’s involvement drawing particular scrutiny.
OpenAI’s collaborators are also exploring varied funding methods. Elon Musk’s xAI, the developer behind the Grok chatbot, is reportedly finalizing a $15 billion fundraising round at a $230 billion valuation, with much of the capital intended for acquiring GPUs. This follows OpenAI’s own $40 billion private funding round in early 2025, which valued the company at $300 billion. By relying on private investments from backers like Microsoft and SoftBank, OpenAI has avoided going public. Microsoft, as a major investor and partner, leverages OpenAI’s technology to strengthen its Azure cloud services.
Industry analysts warn that the current wave of borrowing could echo previous speculative bubbles. For example, Symbotic, a robotics firm with a $22.5 billion backlog from clients like Walmart and SoftBank, recently posted a 30% year-over-year revenue increase but continues to operate at a loss. This highlights the ongoing struggle for AI-focused companies to balance aggressive expansion with achieving profitability.
As the AI industry continues to attract unprecedented levels of debt, questions remain about the long-term sustainability of these investments. While companies such as Oracle and CoreWeave argue that building AI infrastructure is essential for future competitiveness, skeptics caution that the market may be overestimating the short-term returns from AI initiatives. For now, the $96 billion surge in debt reflects a collective wager on AI’s potential—and a willingness to embrace significant financial risk to secure a foothold in the next era of technology.