Eurodollar University The TRILLION Dollar AI Debt Bubble Is Bursting
Jan 5, 2026
Steve Van Metre, an investor and market expert on credit and corporate finance, dives into the intricacies of the AI debt bubble. He highlights how tech giants are heavily borrowing for AI projects, creating a dual risk for the economy. The conversation spans key insights from Howard Marks on bubble psychology, the increasing debt loads of major firms like Microsoft and Meta, and the potential fallout for smaller businesses tied to AI spending. Van Metre warns that rising credit issues could threaten equity markets and halt innovation.
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AI's Bubble Is A Debt Story
- The AI surge is driven more by vast borrowed credit than by equity enthusiasm alone.
- That makes the risk multi-dimensional and tied to the credit cycle, not just stock prices.
Credit Amplifies Economic Danger
- When credit amplifies a bubble, its economic dangers widen compared with an equity-only bust.
- Credit exposure can turn a market correction into broader economic stress.
Watch Credit Signals, Not Just Stocks
- Monitor credit-market signals, not only equity moves, to assess AI-related risks and opportunities.
- Treat credit indicators as potentially leading signals for broader market stress.