Credit investors are reportedly pumping billions into artificial intelligence (AI) efforts amid concerns about an industry bubble.<\/p>\n
For example, there is a $22 billion-plus loan sale led by JPMorgan Chase and Mitsubishi UFJ Financial Group, Bloomberg News reported<\/a> Saturday (Aug. 23). Sources with knowledge of the matter say that funding will help Vantage Data Centers\u2019 plan to build a massive new campus.<\/p>\n Meta, meanwhile, is getting $29 billion from Pacific Investment Management and Blue Owl Capital for another gargantuan data center in rural Louisiana. More of these deals are expected, the report added, as OpenAI projects it will ultimately need trillions<\/a> of dollars to develop the proper AI infrastructure.<\/p>\n This is all happening at a time when fears of an AI bubble are driving down tech stocks<\/a>, with companies like Amazon<\/a>, Apple<\/a>, Google<\/a>\u00a0and Nvidia<\/a> also seeing declines last week.<\/p>\n \u201cPundits pointed to two culprits: Comments by OpenAI CEO Sam Altman that AI could be in a bubble, and a report from MIT saying that 95% of companies it studied are getting \u201czero return\u201d<\/a> from generative AI,\u201d PYMNTS wrote Friday (Aug. 22).<\/p>\n Altman had said he sees parallels between today\u2019s scramble among investors to ride the AI wave, and the dot-com bubble<\/a> in the late 1990s. Speaking about startup valuations during an interview, the CEO said \u201csomeone\u2019s gonna get burned there.\u201d\u00a0<\/p>\n The situation has made credit watchers wary, the Bloomberg report added. Early efforts to build AI infrastructure were largely financed by companies themselves, such as Google and Meta. But more recently, that money has been coming more and more from private credit lenders and bond investors, the report said.<\/p>\n \u201cPrivate credit funding of artificial intelligence is running at around $50 billion a quarter, at the low end, for the past three quarters,\u201d Matthew Mish<\/a>, head of credit strategy at UBS, told Bloomberg. \u201cEven without factoring in the mega deals from Meta and Vantage, they are already providing two to three times what the public markets are providing.\u201d<\/p>\n In other AI news, PYMNTS spoke last week with Discover\u00ae Network<\/a> Director of Payments Innovation Kate Lybarger<\/a> about efforts by businesses to both use this new technology, while also deploying in ways that align with evolving customer expectations and regulatory scrutiny<\/a>.<\/p>\n Lybarger contended that AI isn\u2019t a revolution for revolution\u2019s sake. It\u2019s a relatively new tool, although a powerful one, that must be employed precisely, transparently and responsibly.<\/p>\n