Swotting up on investment bubbles has become fashionable in recent months.
Satya Nadella, the Microsoft boss, is telling everybody to buy 1873, a book about the railroad boom and bust. Barack Obama recommends 1929, a recent bestseller about the interwar crash.
One day, 2026 may be another ominous title on a famous person’s reading list.
In recent days, a stratospheric AI boom has been replaced by bubble fears as financial markets are jolted by a severe loss of confidence in many of the companies propping up the industry.
Shares in Nvidia and Oracle, two poster children of the boom, are down 10pc from their peak earlier this month, while Anthropic investors have reportedly cut expectations for its looming trillion-dollar IPO.
The greatest damage, however, has been inflicted on a cluster of less well-known names.
Companies such as CoreWeave, Nebius and Iren have all suffered seismic sell-offs as investors baulk at their heavy losses and inflated borrowing costs.
Sceptics believe that distress at these companies, which have borrowed billions to finance a data centre building boom, could be the warning sign for a reversal of the AI trade that has been responsible for most of the stock market’s gains in recent years.
Ken Griffin, the billionaire chief executive of trading firm Citadel, has become the latest investing heavyweight to warn about a bubble, saying last week that we were “almost certainly” in one.
“Any radical transformation of our economy is generally intertwined with a bubble,” he said at a conference in New York.
Much of the early development of AI infrastructure – the data centres, chips and networking equipment that power systems such as ChatGPT and Gemini – came from “hyperscale” tech companies such as Microsoft and Amazon, which already had profitable existing businesses to fund these projects.
The newer crop of companies, called neoclouds, are less flush. Their building booms instead require gargantuan fundraising operations, selling shares and – in particular – issuing debt to pay for their own AI factories.
CoreWeave, the biggest player, has raised $32bn (£24bn) in debt and equity to fund 51 data centres. However, it recorded revenue of just $4.6bn in the first six months of the year.
Nscale, a British rival, has arranged deals to raise almost $10bn in debt alone, despite being just two years old.
The companies are raising these sums on the promise of earning riches in the future.
Both CoreWeave and Nscale have more than $100bn of deals in the pipeline, should they build the demanded infrastructure.
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