The chief executive of HSBC has pushed back against the idea that the artificial intelligence boom will make every data center a winning bet. Speaking at an event in London, the bank's leader cautioned that the rush to build AI infrastructure could lead to overinvestment in projects that do not ultimately deliver returns.
Separately, Mohamed El-Erian, chief economic adviser at Allianz and former CEO of PIMCO, highlighted the growing competition for financing between governments and AI companies. He noted that hyperscalers raised $200 billion in bond financing last year and are likely to raise $1 trillion this year, describing them as "yield insensitive" because they are betting on something transformational.
That surge in borrowing comes as major economies face multi-decade highs in bond yields, driven by elevated deficits, mounting debt, and sticky inflation. JPMorgan Chase has estimated that $4.1 trillion in AI-related debt will be issued by the end of the decade as data center operators and related firms expand capacity. The warnings suggest that while AI demand is real, the financing boom may be creating risks for both investors and governments. [1]