"Inside The Bottomless Pit": The Definitive Look At The Trillions In Debt Funding The AI Supercycle

Just under one year ago, when total AI debt was (only) 14% of the broader $1.2 trillion investment grade market, and when capex was projected to rise by (only) $500 billion, we explained that the pace of debt growth to fund AI supercycle was unsustainable, and we were the first to warn - at a time when very few others cared about AI and hyperscaler debt - that "AI Is Now A Debt Bubble Too, Quietly Surpassing All Banks To Become The Largest Sector In The Market." 

Since then, quite a few things have happened: first and foremost, the hyperscalers are now spending so much money on capital expenditures, that all except Microsoft, are now free cash flow negative, which means that future capex growth will rely almost exclusively on new debt.