Tech giants are going deep into debt to fund a multi-trillion dollar AI arms race, betting on massive returns even as free cash flow turns negative and board members grow uncomfortable with the 'vicious' cash burn.
The tape Bloomberg Surveillance · Sep 8
“If you look at the average credit spread of those hyperscalers, it's basically tripled over the last 12 months, but it's only 66 basis points. So to your point, you had very strong free cash flow for these companies. They have issued debt. They are spending that free cash. But the bottom line is they're borrowing, you call it 6%, and they're earning, in our estimate, almost 30% on that investment.”
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