Elon Musk is warning that many companies tied to the artificial intelligence boom will not survive, as they have been effectively shut out of the debt market. His remarks on social media came as investors brace for a major test this week, with more hyperscaler earnings on tap and details on Anthropic's upcoming I.P.O. expected.
Musk singled out neoclouds, the companies that sell computing power to A.I. companies. He wrote that many of them face "guppy-level death and consolidation." He said his $2 trillion company, Space X, was well cushioned thanks to its investment-grade credit status and booming Starlink internet business.
Musk's comments need context. Bloomberg, citing unnamed sources, reports that the $40 billion credit line for Space X that Musk referred to is not a done deal. Space X has also seen its credit costs soar even as its A.I. revenues climb. Core Weave, which counts Anthropic and Microsoft as customers, was sold off sharply last week, and its credit default swaps have ballooned as investors worry about the borrowing binge driving the A.I. build-out.
Wall Street is hoping a strong trading debut from Anthropic, which is expected to go public as soon as next month, will allay fears about an A.I. bubble. Meta also said it would seek to raise approximately $35 billion in a new share offering and $60 billion in the future to help pay for its huge A.I. expenditures.
Source: New York Times Business · Summarized by HeadlinesBriefing