Debt Can Plug the AI Hole in Big Tech’s Deep Pockets

We’ve moved from marveling about AI’s potential to puzzling over how to pay for it. The price tag seems to grow every day. On Thursday, Tesla CEO Elon Musk suggested Tesla will need so many chips for its robots and self-driving cars that it might build its own chip factory. He also said Tesla would have to spend “tens of billions” to train the AI in its robot. Meanwhile, his archrival, Sam Altman, is pursuing so many investment initiatives that his finance chief (briefly) opened the door to the idea of the federal government helping guarantee the financing for AI chips. 

One group of companies that may have more funding options are the hugely profitable tech firms, such as Google, Microsoft, Meta Platforms and Amazon. These deep-pocketed giants so far have been mostly financing their AI expansion through the cash their businesses throw off, although that’s changing, as this deal done by Meta demonstrated. Last week, Tony Kim, who runs BlackRock’s global technology funds, pointed out in an appearance on The Information’s TITV that given the strength of their balance sheets, the biggest big tech companies could afford to borrow trillions of dollars between them. Imagine what that would mean: Instead of being deep-pocketed giants able to spend freely on whatever struck their fancy, these companies would suddenly be forced to think about every penny they spent. That might not be such a bad thing in the long run, at least for shareholders.