Why Debt Funding Is Ratcheting Up the Risks of the A.I. Boom

The A.I. boom is creating a landscape where smaller companies are compelled to take on debt to remain competitive, as exemplified by OpenAI's massive data center project in Abilene, Texas. This trend of debt funding is concerning, as it amplifies financial risks for these smaller outfits that lack the substantial resources of tech giants. The reliance on borrowed capital could lead to instability in the sector, especially if the anticipated returns do not materialize. As the A.I. industry continues to expand, the sustainability of this debt-driven growth model is increasingly questioned, raising alarms about potential repercussions for the broader technology ecosystem.