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What are you assuming the author case is? The article points out that by normal logic these companies are overvalued and so owning their stock is risky. Now that they've taken on all this debt, it's even riskier.

Debt is directly tied with the ability to repay it, if the cash flow is enough to keep paying it, it's not a big issue, but thing can go horribly pretty fast if someone start having cash problems.

The reason it is so noteworthy is because these companies are based upon valuations which assume mostly debt free companies with giant free cash flows. If Google starts to look like Ford a lot of the assumptions around why it’s worth so much money go out the window. Of course we’re not there but this is a change in direction which is new and noteworthy.

500B on software would be a lot. On infrastructure, it really isnt.

We spent this much (without adjusting for inflation), in 5-10 years on telecom build out in the lead up to the dot com crash. I'm fairly sure that there is still leftover capacity in the ground (dark fiber) today that we can leverage.

Smell like a bubble yet?

Looking back to that pre 2000's era, SUN was running on 50% margins, Cisco at 68%

Nvidia, 70% (and MS openly admits that they have GPU's on shelves not making money: https://www.datacenterdynamics.com/en/news/microsoft-has-ai-... ) Micron (memory) 70%, SK Hynix (SSD's) 70%.

For as much fun as the dot com bubble was, for as hard as the pop was, what came after was MUCH better. This burst is going to be brutal, and the sooner it happens the sooner we can move on to actual (sane) innovation, that leverages this build out.

If you’re profitable and can pay it back, it’s better than equity.

If there’s any financial risk then it may not be worth the potential loss of control.

How do these AI companies turn profitable on a short enough timescale for that to make sense? Suppose a step change AI model comes out tomorrow with good enough reasoning to basically replace an employee. Businesses need to retool workflows and processes to accommodate, even if it's better. This is years away, not months. There's not enough market for the compute. And that all assumes science fiction level results, which there is absolutely no indication they will achieve.

Also, if you have expectations that future inflation may be high, the leverage of borrowing can make sense as a hedge against your cash equivalent holdings in that scenario.

But money has not been cheap for a while now so this is interesting. And yes, if you can do something more profitable with it, borrowing is always smart no, regardless of how cheap it is?

Put ot all on a heap on eletrically charged sand and light it on fire?

Which is strange, because they did not in fact implement a big (or any) increase in the federal funds rate.

I also notice the article is "tagged" as if its title had been split on lowercase 's'es:

> Big tech i

> borrowing like never before and the fed ju

> T made that a lot more expen

This level of attention to detail does not exactly inspire confidence.

> That is the part investors should sit with.

This sounds like AI (Claude).

The article has a lot of AI fingerprints, and reads like it was mostly AI written with a human editing round.

Financially? Sure. Politically? Not a chance, they'll get bailed out or partially nationalized.

Frontier labs will be considered essential to national security, Microsoft is basically a public utility at this point, Facebook is too important for the spread of propaganda (although this one has less of a case/justification for a government bailout), Amazon (via AWS) runs massive parts of the federal gov (along with Azure), Google dying would cause almost an immediate global depression (73% of mobiles run android, the massive ad network).

These companies are so entrenched in day to day operations and into the economy that they cannot fail without ushering in whats effectively dark ages 2.0

What do we mean by big companies? Because SpaceX is giant and can for sure fail. But do you mean companies with an actual, reliable business model?

After the bailouts of 2008, I think the only thing to fear is that the US government will fail first. As long as they can afford to keep big businesses going, they will. Whether things will get bad enough that the government can't afford to do that is an exercise to the reader.

I don't think the big companies will fail, but their stock prices could dramatically drop. I think newer smaller companies like OpenAI and Anthropic could easily fail, as well as a bunch of other AI start ups. Altogether it could make for some difficult financial times like in 2000 and 2008

Yahoo failed. AOL failed.