Artificial intelligence is beginning to lose access to financing. Microsoft is backing out of an agreement with Oracle to lease cloud capacity for AI projects.
At the same time, banks have begun shedding debt obligations tied to AI. According to Bloomberg, ING has put 12 loans worth a total of about $500 million up for sale—including a $25 million stake in the Stargate project, being developed by OpenAI, SoftBank and Oracle in New Mexico.
The situation is compounded by the fact that Oracle has already notified the developer of force majeure circumstances. In addition, the S&P 500 plunged by $3 trillion in a single trading day as investors fear the Democratic Party will take action against the AI industry.
All large-scale construction of AI infrastructure is being funded with borrowed money: this year, Big Tech companies have raised $326 billion in loans. If lenders begin pulling out of such deals, the question of how the industry will be financed going forward will remain unanswered.
Signs of belt-tightening are already apparent. Users have noticed that AI responses have become lower in quality—Anthropic, Google, OpenAI and xAI appear to be quietly cutting computing capacity to reduce costs.
At the same time, banks have begun shedding debt obligations tied to AI. According to Bloomberg, ING has put 12 loans worth a total of about $500 million up for sale—including a $25 million stake in the Stargate project, being developed by OpenAI, SoftBank and Oracle in New Mexico.
The situation is compounded by the fact that Oracle has already notified the developer of force majeure circumstances. In addition, the S&P 500 plunged by $3 trillion in a single trading day as investors fear the Democratic Party will take action against the AI industry.
All large-scale construction of AI infrastructure is being funded with borrowed money: this year, Big Tech companies have raised $326 billion in loans. If lenders begin pulling out of such deals, the question of how the industry will be financed going forward will remain unanswered.
Signs of belt-tightening are already apparent. Users have noticed that AI responses have become lower in quality—Anthropic, Google, OpenAI and xAI appear to be quietly cutting computing capacity to reduce costs.
