AI companies borrowing to expand, but profits not keeping up might drag down the entire financial market AI expansion is increasingly relying on borrowing. According to the latest IMF report cited by Reuters, large cloud computing companies now account for 10% of new global investment-grade bond issuances, compared to less than 1% in 2024. This shows that more and more funds are betting on future revenues alongside AI. Stock investors are waiting for profits, and lenders are waiting too. Building data centers, buying chips, and securing electricity all require upfront spending. As for when these investments will pay off, it depends on how much customers are willing to spend and how long they’ll stick around. The market supports expansion because it believes future revenues will catch up—spend more today to capture more market share tomorrow. But the more debt a company takes on, the less time it has to wait, since interest and maturing debt need to be paid on time, even if business grows slowly. If AI companies can’t generate profits fast enough to match their investments, the pressure will ripple outward. To preserve cash, companies might slow down construction and cut back on purchases. The money they don’t spend becomes lost orders for chipmakers, equipment suppliers, and engineering firms. If several big companies scale back at once, the ripple effect will impact more and more businesses, putting pressure on their revenues, investments, and debt repayments. Meanwhile, lenders seeing slower repayments might become cautious, reducing the amount they’re willing to lend or demanding higher interest rates. This makes it even harder for companies needing financing—revenues fall short of expectations, borrowing becomes more expensive, and they’re forced to cut back further. If the data centers and equipment used as collateral also depreciate, the amount they can borrow shrinks even more, tightening the chain further. At this point, the pressure could spill into the market. Institutions holding related bonds and loans might face losses, and if they encounter redemptions or margin calls, they’ll need to sell other holdings to raise cash. What they sell could be tech stocks or other liquid assets. Once funds start reducing positions across the board, risk assets like U.S. stocks and bitcoin:native could feel the impact. One @Gate, trade more markets.