Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2026. REUTERS/Brendan McDermid/File Photo
Critics say President Donald Trump’s Wall Street market is on the rise almost solely due to growth in one industry: AI. But analysts are worried that Wall Street’s AI debt machine is “starting to choke on supply,” with AI reaching its build out limit — and the only place left to go being down.
“A new anxiety is gripping Wall Street as it bankrolls the vast network of data centers and chips behind the artificial intelligence boom: Early signs suggest that the credit market is approaching the limits of how much more debt it can absorb,” reports Bloomberg. “One after another, yields are soaring into the double digits on bonds and loans funding the AI infrastructure buildout. Bankers are finding it more difficult to offload risk to insurers and other investors.”
Bloomberg adds that Elon Musk himself warned “that hundreds of so-called neoclouds risk going under as firms get cut off from fresh financing.”
“Jitters” are growing louder each week, said Bloomberg, as well as angst about the “potential economic fallout.” Citadel Securities has taken to warning clients that even the biggest names in tech “could get ensnared as they put their balance sheets behind scores of projects” concerning AI.
“That risk is increasingly becoming evident in the market for credit default swaps, where banks and other lenders hedge their exposure,” reports Bloomberg, adding that the cost of insuring against losses on the debt of companies like Broadcom, Oracle and Musk’s own SpaceX has recently spiked, “reaching levels more typical of junk-rated borrowers.”
The damage, warns Bloomberg, “is already starting to spread to broader credit markets.”
“When you have such a large quantum of debt coming, at some point the challenge could be less about finding an investment-grade backstop, and more about finding the actual buyers willing to absorb more of the risk coming from the same handful of investment-grade backstop providers,” said Citadel analyst Tucker Roberts.
While big name tech giants have managed to wrangle “tens of billions of new financing” this week, a growing concern is that trillions more in debt will be needed over the coming years — but it’s reaching its limit.
“[T]here appears to be a growing disconnect between what Silicon Valley’s top executives believe can be raised, what financiers say they can deliver, and what money managers are willing to take down,” reports Bloomberg, while pointing out that conversations with more than 30 bankers, money managers and private equity executives reveal that raising cash “has become significantly more difficult than it was just months ago.”
And debt providers are starting to get picky, said Bloomberg, with one hedge fund telling reporters that it recently dumped a data center deal after discovering that the contracted firm had an option to walk away if the project got delayed more than 90 days.
President Donald Trump sees the stock market as a referendum on his performance, and by many accounts the numbers are high. But Bloomberg Analyst Jonathan Levin said don’t fool yourself into thinking the market is sailing on a wave of glory. This thing is “lousy for most,” he opined. Most Americans aren’t making much money on that one industry buoying Trump’s market.
Worse, he said, if that industry falters it could hurt everything else around it.
