Feeding the AI beast
QQQ•Investor concerns about AI companies’ capital needs, valuations and profitability weighed on technology stocks. OpenAI reportedly told investors its annualized September revenue was almost $50 billion, below what it had signaled earlier, while Morgan Stanley estimated AI infrastructure will need $1.5 trillion in external financing by 2028.
1. AI funding pressures
Investor concerns about the capital needed to build AI infrastructure have cast a shadow over markets, with questions about valuations and profitability persisting. OpenAI reportedly told investors its annualized revenue for September was almost $50 billion, below what it had signaled earlier. Australian data center operator Firmus shelved its $5 billion IPO and said it would pursue a private fundraising round instead.
2. Borrowing costs rise
SpaceX, Broadcom and Oracle are expected to raise billions to buy high-end AI chips. Morgan Stanley estimates AI infrastructure will require $1.5 trillion in external financing by 2028, as higher global interest rates and demands for clearer visibility into customers and cash flows increase financing pressure. Brent crude remained above $100 a barrel, while elevated bond yields and France’s budget debate also drew attention.
