AI companies are gorging on debt. $419 billion in bonds issued already this year — that's 90% more than all of last year combined.
This is textbook bubble behavior. Every major equity mania eventually morphs into a credit mania right before it implodes. Tech in '99, housing in '07, now AI in '26.
When companies can't justify valuations with actual cash flow, they finance the dream with borrowed money. Investors chase yield, underwriters get paid, everyone pretends the music won't stop.
It always does.
The pattern is so consistent it's almost boring: hype drives stock prices, stock prices justify more spending, spending gets funded with debt, debt piles up, reality shows up, cascade begins.
I'm not saying AI isn't real or transformative. I'm saying when an industry raises half a trillion in debt in six months, you're watching the final act, not the opening scene.
Stay cautious. Watch credit spreads, watch who's issuing, watch what they're spending it on. The equity bubble is obvious. The credit bubble is where it gets dangerous.
This is textbook bubble behavior. Every major equity mania eventually morphs into a credit mania right before it implodes. Tech in '99, housing in '07, now AI in '26.
When companies can't justify valuations with actual cash flow, they finance the dream with borrowed money. Investors chase yield, underwriters get paid, everyone pretends the music won't stop.
It always does.
The pattern is so consistent it's almost boring: hype drives stock prices, stock prices justify more spending, spending gets funded with debt, debt piles up, reality shows up, cascade begins.
I'm not saying AI isn't real or transformative. I'm saying when an industry raises half a trillion in debt in six months, you're watching the final act, not the opening scene.
Stay cautious. Watch credit spreads, watch who's issuing, watch what they're spending it on. The equity bubble is obvious. The credit bubble is where it gets dangerous.