On Investors’ Minds - APAC Edition Do circular AI deals warn of a bubble?
Oct 24, 2025
Stephanie Aliaga, a Global Market Strategist at J.P. Morgan, dives into the complex world of AI investments and their implications. She discusses whether the current circular investments among AI developers, hyperscalers, and chipmakers signal a bubble reminiscent of the dot-com era. Stephanie highlights the critical demand for compute power and contrasts today's funding landscape with that of the past. Expect insights on how AI generates real revenue and crucial lessons for investors navigating this evolving tech landscape.
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Circular Investment Is Coordination, Not Fake Demand
- AI deals show circular investments among model developers, hyperscalers, and chipmakers due to high entry barriers and limited ecosystem participants.
- This circularity coordinates supply but differs from 2000s vendor-financing because demand appears genuine and supply is tight.
Compute Demand Is Hitting Capacity Limits
- Data center utilization is near operational maximums and vacancy rates are historically low.
- Exploding compute demand contrasts with the dot-com era's large unused capacity.
Cash-Rich Techs Fuel AI, Not Reckless Credit
- Major tech firms fund AI expansion largely from strong free cash flow and balance sheets rather than risky external financing.
- Roughly $1.2 trillion of commercial debt ties to AI infrastructure but mainly sits with high-quality issuers.