The Morning Download: Financing the AI Boom

What's up: AI could be making Big Tech weaker; Data centers in space; CIOs are upping their game.

Good morning. Tech investment has been closely associated with venture capital. But venture funds focus on the earlier stages of a portfolio company’s development, and even the largest venture funding rounds are modest compared to the scale of the credit markets.

As the AI boom looked beyond developing models to commercializing them at scale, it needed massive amounts of computing capacity to serve the anticipated needs of future customers. And that is where banks and other financial institutions stepped in, providing the financial wherewithal to fund trillion-dollar investments. For an inside look at the financial mechanics, and the risks they entail, take a look at “Wall Street Blows Past Bubble Worries to Supercharge AI Spending Frenzy.”

It’s all happened so fast:

Not long ago, Blue Owl Capital was an upstart investment firm that lent money to midsize U.S. companies such as Sara Lee Frozen Bakery.

These days, the firm is financing massive data centers costing tens of billions of dollars for the likes of Meta and Oracle—a sign of just how quickly Wall Street has become the enabler of America’s artificial-intelligence boom.

There’s plenty of opportunity for creative financing, too:

Some of the financing is coming from plain-vanilla corporate bond sales, but financiers are making far bigger fees off giant private deals. Virtually every Wall Street player is angling to get a piece of the action, from banks such as JPMorgan Chase and Morgan Stanley to traditional asset managers such as BlackRock.

The story lays out the risks that come with an historic wave of investment in AI infrastructure. If the bets go bad, the “blast radius" would be wide, given the exposure of so many parts of the financial system. But tech executives see more risk in underbuilding than overbuilding. “I thought we were going to catch up. We are not. Demand is increasing,” Microsoft finance chief Amy Hood said.

Alphabet led a premarket rally Monday in technology stocks, rising more than 5% after Warren Buffett’s Berkshire Hathaway said it took a stake in Google's parent last quarter. 

Peter Thiel’s hedge fund Thiel Macro sold off its Nvidia holdings during the third quarter, some 537,742 shares, Bloomberg reports. 

The race to build AI data centers could be spacebound as tech moguls talk big about the day when future facilities zip above the earth, harvesting the sun's energy for their power-hungry operations, WSJ reports.

“We will be able to beat the cost of terrestrial data centers in space in the next couple of decades,” Jeff Bezos said at a tech conference last month. “Space will end up being one of the places that keeps making Earth better.”

Amazon founder back in the saddle at startup. Bezos will be co-CEO at Project Prometheus, a startup he helped fund that will focus on using AI to improve manufacturing in areas like aerospace and automobiles, the New York Times reports. 

The biggest tech companies remain financially strong, but massive AI spending is reshaping their business models and weakening cash positions.

Microsoft, Alphabet and Amazon have spent more than $600 billion on AI infrastructure since 2023, enabled by robust profits that will total roughly $750 billion from 2023 to 2025. But their cash balances have fallen sharply, WSJ's Asa Fitch reports. Microsoft’s cash and short-term investments dropped from 43% of assets in 2020 to 16% today. Alphabet and Amazon are on track to report lower free cash flow this year than last.

New metrics for the AI build-out. Analysts expect tech giants to spend $1 trillion on AI over four years, making them look more like capital-intensive semiconductor players than traditional high-margin software firms. And investors may start focusing on new metrics such as AI user numbers and long-term revenue commitments. They are showing less patience with companies not yet monetizing their AI bets.

Yann LeCun invented many fundamental components of modern AI. Now he’s convinced most in his field have been led astray.

Meta's chief AI scientist and winner of the 2018 A.M. Turing Award thinks large language models are a dead end in the pursuit of computers that can truly outthink humans, WSJ reports.

“We are not going to get to human-level AI just by scaling LLMs,” LeCun said on Alex Kantrowitz’s Big Technology podcast this spring. “There’s no way, absolutely no way, and whatever you can hear from some of my more adventurous colleagues, it’s not going to happen within the next two years. There’s absolutely no way in hell to–pardon my French.”

Now as Meta’s new AI research organization focuses on new LLM-powered breakthroughs under 28-year-old Alexandr Wang–LeCun’s new boss–and ChatGPT co-creator Shengjia Zhao, LeCun is talking to associates about creating a startup focused on world models, recruiting colleagues and speaking to investors, The Wall Street Journal previously reported.

Deloitte’s latest Tech Exec Survey captures the tech C-suite upping its game, with 80% of tech executives reporting major expansions in their roles.

Some 622 senior technology leaders were surveyed between March and April 2025.

CIOs are moving closer to the corner office. Sixty-five percent now report directly to the CEO, up from 41% a decade ago, according to Deloitte. CIOs also are the most ambitious among tech leaders, with 36% managing a P&L and 67% aspiring to become CEOs. Some 41% of CTOs and 42% of chief data and analytics officers see the corner office in their future.

The eternal CIO (at least for the next five years). Nearly all respondents, 92%, believe the CIO role will still exist in five years, driven by its importance in cybersecurity, transformation, and emerging technology adoption.

"It's one of a handful of roles that has the biggest horizontal remit," said Lou DiLorenzo Jr., a principal at Deloitte Consulting and its Tech, AI and Data Strategy practice leader. "There's not a dollar of revenue that doesn't touch technology. So they are completely across the enterprise. And in most cases, deep."

Deloitte is a sponsor of CIO Journal.