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Financing the AI boom: from cash flows to debt [pdf]
- ChrisArchitect 4mo ago(January 2026)
- datadrivenangel 4mo agoBIS released a larger report in June that identified AI financing/sustainability as one of the biggest risks for the global economy: https://www.bis.org/publ/arpdf/ar2026e.htm https://www.bis.org/publ/arpdf/ar2026e.htm
- senectus1 4mo agopre-echos of "too big to fail"
- nativeit 4mo agoI’m not sure I understand these references. The banks were too big to fail specifically because they were banks involved with the finances of every major industry and government, not simply because their (arguably specious) valuations, or even market caps, had a ton of zeroes on them. What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy that it can’t be allowed to fail? What’s the argument for how such a bailout would result in greater economic outcomes? The banks that got bailed out continued lending and immediately resumed profitable business, how will the AI companies offer value towards such a proposition?
- datakan 4mo ago“National security! We can’t let China win the AI race!” Or some BS
- cindyllm 4mo ago[dead]
- aurelius_v 4mo agoWho do you think the private credit lenders are exactly?
- boccaff 4mo agoThe value of AI and related companies on retirement funds
- jordanb 4mo agoMoreover what would a bailout even look like? The banks got loan guarantees from the government essentially. But like what happens if the government guarantees open ai's loans if the company is structurally unprofitable? Does the government create an operating subsidy?
- iambenm 4mo agoModeled on Chrysler, perhaps?
- andsoitis 4mo ago> Modeled on Chrysler, perhaps? The government intervened to prevent massive job losses, protect the domestic auto industry, and, in the 1979 case, preserve critical national security manufacturing, as Chrysler produced the M-1 Abrams tank. Now, I suppose it is possible to imagine that the US government might bail out either or both of OpenAI or Anthropic (whether or not there's an ROI like there was with the Bank Bailout of the 2008 crisis) if the govt. deemed the technology critical to keep a fast pace on (I think we can say without doubt that requirement is satisfied) but, crucially, the government's calculus is that it is better to have these companies compete rather than bring the knowhow in-house. Is that what you're thinking?
- iambenm 4mo agoWhat came to mind to me was a bailout shaped to benefit the public even if the company failed post-bailout, specifically the Chrysler Tech Center and how it was designed as a building that could be repurposed as a shopping mall if it fell through. Odd, interesting place.
- etskinner 4mo agoInference is cheap, only the training is expensive. Both Bernie and Trump have suggested doing a partial government takeover of the big AI companies to start a sovereign wealth fund. So it would look like the government taking ownership, letting investors lose their stake, and then operating as inference-only, which would turn a profit
- BrenBarn 4mo agoThe argument has already been made. They argued that their business model would collapse if they weren't allowed to train on a bunch of data that wasn't theirs, and nobody stopped them. The argument will be made even more later, as they will argue that too many companies are dependent on their technology, etc.
- yndoendo 4mo agoToo big to fail is an oxymorononic statement. Bailing out bad businesses retains those that poorly managed them. Those organizations should of been sold off to remove the bad actors. AI is currently a sunk cost to the US stock industry that is repeating the bad actor scenario. Not a single AI company is profitable and none of them produce deterministic nor cost effective solutions Microsoft's statment of using AI to find the most resource intensive applications being ran highlights this. Task Manager does the same thing and does not need a server farm for training. It also uses MB of RAM vs GB. If manufacturing had the same error rate in production as AI, those plants would of went out of business. Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Too big to fails are false claims to retain the bad actors that fund politicians. Bad actors need to fail so the good ones can properly operate. Too big to fail is also allowing large corporations to skirt copyright laws. You or I seeding TB of copyright content would be thrown in jail. Too big to fail is rebranding of legalizing corruption.
- andsoitis 4mo ago> Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? I just don't think that chain of events is likely. The current administration pays very close attention voter sentiment.
- drdexebtjl 4mo agoIt wouldn’t be the first time the US government made expensive and unpopular moves in the name of national security and walked away largely unscathed.
- andsoitis 4mo agoThat’s not a convincing argument that it is likely to happen in this case. For me to be more convinced, it would be helpful understand what similar specific example you have in mind that points to such likelihood in this case.
- watwut 4mo ago> The banks that got bailed out continued lending and immediately resumed Pushing against regulation supposed to prevent this happening again. They also resumed taking a lot of risks, just like before. Their managers got rich while doing the same decisions as before, because other people paid the price. > What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy It does not need to be inherently critical and interweaved with the rest of the economy. It has to pay the bribe to the right president. The "military necessity" excuse will be used then.
- misja111 4mo ago> What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy that it can’t be allowed to fail? AI companies are more and more interweaved with the economy because half the world is owning their stocks or has lent them money. Or, they have invested in companies that in turn have invested in AI. It is very similar to the situation before the credit crisis.
- disgruntledphd2 4mo agoSortof, much of the financing up to now has been from equity, rather than debt (with the exception of Oracle). As the funding profile moves more towards debt, there's a bigger chance for problems as leverage tends to amplify the bad outcomes. If Big AI (basically Mag 7) continue to issue debt, then there may be financial stability risks if it all blows up. The numbers are fine now, but the trend line is concerning (hence the BIS paper).
- anon373839 4mo agoThat's obviously how the AI labs are trying to position themselves. But slop generators are not integral to anything. They most definitely should be left to fail, and if the market so dictates, the hundreds of billions invested should go to zero.
- nullsanity 4mo ago[dead]
- surgical_fire 4mo agoThe thing about bailing OpenAI or Anthropic is that they would need a new bailout every few months.
- 1vuio0pswjnm7 4mo agoThread: https://news.ycombinator.com/item?id=48912577 https://news.ycombinator.com/item?id=48912577
- lbrito 4mo agoHigh growth scenario and medium growth scenario (Graph 2). I feel like an idiot asking - aren't we missing some, or at least one, scenario? Is "medium growth" for the next 4 years really the worst people can think of?
- oh_my_goodness 4mo agoFinancial news tends to be written for people who can fill in a lot of blanks themselves.
- mohammedmsgm 4mo ago[flagged]
- jgalt212 4mo agoHmm. Perhaps too similar to pre-GFC when the ratings agencies' models never accounted for scenarios where home prices went down at the national level.
- Swizec 4mo ago> Is "medium growth" for the next 4 years really the worst people can think of? At this point anything less than "medium growth" will crash the economy. We'll have bigger problems if that happens (think 2000 or 2008)
- free_bip 4mo agoRight... So since it's a big problem, shouldn't we at least be considering it as a possibility so that we can minimize the impact?
- deleted 4mo ago[deleted]
- therobots927 4mo agoNo no no… that’s unecessary. Because it won’t happen.
- redwood 4mo agoI've seen other reports that suggest the level of investment for eclipses the internet buid out in 2000 and the railroad boom more than a century earlier. I wonder if they use different ways of landing on these wildly different assessments
- cperciva 4mo agoYes. In inflation adjusted dollars spending on AI dwarfs previous "megaprojects". But as a fraction of GDP it's fairly modest -- comparable to the Apollo Project. It's a sign of how much the economy has grown that under "1% of GDP for a few years" now is far bigger than "over 10% of GDP for a few decades" was in the late 1800s.
- tripletao 4mo agoYou seem to be implying that railway spending was "over 10% of GDP for a few decades" in the late 1800s. If yes then can you trace that back to a methodology? I tried and found much lower numbers, around 3% average over the peak decade. https://news.ycombinator.com/item?id=44805979 https://news.ycombinator.com/item?id=44805979 Your estimate of current AI spending is also low. Hyperscaler capex alone is around 2% of US GDP, not including other costs (neoclouds, employee comp, etc.).
- cperciva 4mo agoYou're right, I was remembering the peak and duration of the railway boom but of course it wasn't at the peak for the entire duration.
- webnrrd2k 4mo agoManhattan Project: $36B, 5 years ▫ Apollo Program: $257B, 14 years ▫ Interstate Highway System: $620B, 37 years ▫ AI data centers: $930B, 6 years and still accelerating From: https://substack.com/@rubendominguez/note/c-244929068 https://substack.com/@rubendominguez/note/c-244929068
- 4mo ago
- mrcwinn 4mo ago[flagged]
- doctorwho42 4mo agoWe don't have to spend it on hardware with such short use-life to spend down those dragon hoards... The amount of money we are talking about could have given the entire US high speed commuter rail.
- edoceo 4mo agoOr every teacher gets classroom supplies for five years. Or treatment programs for addicts. There are a lot of economic benefits to helping folks on the lower side of the income spectrum.
- arjie 4mo agoYeah but taxing 50% of all earnings below $100k could also do that. What money can be spent on is fine but I think we’ve got a good system where people can have reward for economic output and they can use that to allocate money where they want. There are places with central planning and I don’t like them. Personally, I’d rather the money be spent on datacenters. And as it goes, the guys with the money also would prefer that.
- paulhebert 4mo agoYou would rather build data centers than buy school supplies or implement a nationwide high speed commuter rail network?
- arjie 4mo agoYes. To do the latter things as a substitute would require appropriation of other people's money to spend on highly captured industries. I'd rather that not happen.
- 4mo ago
- mattas 4mo agoThinking out loud, is productivity the ultimate macro benefit of AI? Should we expect macro AI investment to be a leading indicator of macro productivity gains? For example, did macro investment in factory automation predict future productivity gains?
- blobbers 4mo agoAt least if the datacenters usage crashes, we'll have cheap power from all the infra that got built.
- rogerrogerr 4mo agoNo, we won't - there's significant capex on all that infra that will have to be paid down, and we won't have datacenters to help pay for it.
- dd8601fn 4mo agoCall me overly cynical, but I’m willing to bet we’re already footing the bill in more than a few ways.
- deleted 4mo ago[deleted]
- steveBK123 4mo ago+GPUs have significantly shorter useful life spans than say, all the dark fiber laid in the 90s
- blobbers 4mo agoI'm talking about the Watts used to power the GPUs, not the GPUs themselves.
- lelanthran 4mo ago> No, we won't - there's significant capex on all that infra that will have to be paid down, and we won't have datacenters to help pay for it. AIUI, OP is saying that, with all these DCs with no load, we'll have excess electricity generation capacity that was built to support these DCs. That's the "cheap power" he is talking about, not necessarily "cheap computational power".
- 4mo ago
- amazingamazing 4mo agoUsefulness aside, I see little evidence AI is making money (profit, not revenue) for any firm whose profit doesn't come from the AI itself or the infrastructure, including supply chain. I'd love to hear a counterexample. One such example would be of a hypothetical company that does translations for payment, and with AI they now are making more profit because they use AI to do the translation rather than pay a translator. Duolingo is such a company you would expect AI to help a lot. Surely AI could allow it to cut costs substantially. And yet, in the past year its stock is down 70% and in Q1 2026 profit has not seemed to increase compared to Q4 2025. In fact, other than Q3 of last year which had some tax shenanigans, their profit is relatively flat. Not a great look given that AI is highly disruptive to their product. --- AI is actually insidious. Suppose you're in a competitive industry like Costco making 3% (net profit) margin. Suppose the average costco employee makes 60K. Then you come in and think it would be great to have an AI agent lets every employee ask questions of inventory to help customers. Surely if employees could use AI that could somehow make more money for Costco. Hypothetically let's say this ends up costing about the same as the basic subscription in terms of tokens. $20/employee/month Can't be that bad right? $240 ÷ 0.03 = $8,000 (in other words, generate over 10% of their own salary in marginal additional net profit every year). Is Costco really going to generate 8K more per employee? Nope. And yet, firms like Costco who choose AI effectively just lower their own profit margins.
- rubyfan 4mo agoTranslator services usually get paid because they offer an accreditation or certification that the humans doing the translation are trained and are not randos / computers. I could imagine these services becoming marginally more efficient but no dramatically improving profits.
- rainprincess 4mo agoI think this is a great point. I want to add context for Duolingo because I think it's confounded by cultural conversation. Duolingo in some Q1 earnings call stated it was going to go AI-native. They were going to switch from contractors to AI. This led to a huge PR crisis, especially on TikTok, where they used to have a big online presence and GenZ influence. I'm not sure if they ever recovered the image they had after that. They tried, and they got pushback from their consumer base. Your Costco example makes a lot of sense to me. Right now at my company we are spending hundreds and thousands per employee, but it's not like everyone has an idea that is meant to be integrated into product. So everyone's just making more vaporware. I do think this is the year the numbers and projections will start coming down to the ground. We can already see this with the fact that the leaders at the frontier labs have stopped talking about AGI and have started talking about token costs and just direct comparisons. It's no longer pie in the sky.
- physix 4mo agoI'm not sure the current administration is fully driven by macroeconomic arguments.
- MichaelMoser123 4mo agoSpeaking of financing: how is the Anthropic IPO going, what is the timeline? They filed over a month ago, no news since. (I would have expected some spectacular news headlines that would be designed to fuel public interest in the impending IPO, but can't detect anything of substance)
- SpicyLemonZest 4mo agoAFAICT, the last we heard of any AI company IPO was that OpenAI got spooked by the market response to SpaceX and is considering punting to 2027 (https://www.the-independent.com/tech/openai-ipo-date-valuation-spacex-b3003503.html https://www.the-independent.com/tech/openai-ipo-date-valuati...). My money is on Anthropic similarly punting, especially if SpaceX manages to cross the very very short distance remaining to drop below the IPO price.
- grey-area 4mo agoThey think things will be better for them in 2027? This is the pattern I’d expect for their IPOs too, give their current fantasy valuations.
- eric_khun 4mo agothey're probably waiting to see how market reacts to fable5 and gpt 5.6
- MichaelMoser123 4mo agojust recalled: some significant open source projects are being rewritten in Rust, with the help of Claude. I don't know if these efforts will be successful in the long run, but in some way these news headlines may be creating a media dynamic as part of the IPO preparations? [1] https://news.ycombinator.com/item?id=48870966 https://news.ycombinator.com/item?id=48870966 pgrust passes 100% of the Postgres regression tests [2] https://news.ycombinator.com/item?id=48837877 https://news.ycombinator.com/item?id=48837877 Rewriting Bun in Rust [3] https://news.ycombinator.com/item?id=48789325 https://news.ycombinator.com/item?id=48789325 My AI-built PHP engine in Rust passes 17% of PHP-src tests, renders WordPress (ekinertac.com)