JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon says the AI spending boom is competing with heavy government borrowing for capital as interest rates rise.

“Rates are going up. A lot of demand for capital, a lot of government financing,” Dimon told Bloomberg Television Tuesday.

Bloomberg’s Tom Mackenzie cited JPMorgan estimates that AI capital spending could rise from roughly $700 billion this year to $1 trillion next year.

Asked whether the bigger risk was the physical buildout, monetization or the cost of capital, Dimon said “all of those things,” and pointed to changing AI models and semiconductors, shifting schedules and lawsuits over data-center construction.

“There’s a lot of borrowing,” Dimon said. “And then the government’s borrowing $2 trillion again.”

AI Is Competing for Capital

Five of the biggest AI hyperscalers have issued about $220 billion of debt this year, more than double last year’s total, Reuters reported.

The spending is hitting cash flow unevenly. Alphabet (NASDAQ:GOOGL) posted its first-ever quarter of negative free cash flow, burning $5.9 billion in the second quarter, and raised its 2026 capital spending forecast to as much as $205 billion.

Amazon (NASDAQ:AMZN) lifted its 2026 plan to about $220 billion, and its trailing 12-month free cash flow fell to negative $7.6 billion.

Microsoft (NASDAQ:MSFT), by contrast, generated $19.6 billion of free cash flow in the June quarter despite $41 billion of capital expenditures.

Riskier borrowers are tapping credit markets too. Goldman Sachs counts $88 billion of lower-rated AI-related borrowing this year as companies look for ways to finance data centers and computing infrastructure.

Meanwhile, the 10-year Treasury yield recently touched 5.34%, its highest level since 2002.

Dimon said higher rates could be positive if they reflect productive demand for capital. He drew a distinction with government borrowing used for consumption, which he said can add to inflation.

Dimon Still Thinks AI Will Pay Off

Dimon isn’t arguing against the spending itself. He compared the AI buildout with the internet era, saying “in total, it pays off.”

“AI itself, I think, creates a lot of value,” Dimon said. “And so I’m not really worried about it.”

Prediction traders also see little chance of an imminent bust. Polymarket puts the chance of an AI industry downturn by Dec. 31 at about 6%, with roughly $2.43 million traded.

Markets remain far from that scenario. Nvidia was up about 0.4% Tuesday, pushing its valuation toward $6 trillion as the Nasdaq traded at record levels.

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