I don't see how it can be a bubble (or at least a risky one) without much debt. Places like Google and Meta profit $100B a year from operations and are funding most of this from cashflow. The risk is that they have to write down a bunch of overbuilt data center assets in a few years, but lenders won't be going under because there aren't any lenders involved. And without lenders being at risk, the system isn't at risk.

*There is some leverage. Coreweave has borrowed a bit for example. But none of this is really systemic and no one is levered to the eyeballs in the AI space.

There is a bit of nuance to the cashflow. That $100 bn cashflow was used for something else before AI: mostly share repurchases and M&A. Now it's being redirected to capex. That removes some of the support for the stock prices; there's no longer a multibillion dollar bid every year for GOOG / META / MSFT etc. stocks.

But you're right that this shouldn't affect lenders, unless we see a lot more borrowing (which is coming, BTW: ORCL and GOOG just issued $10+ bn debt each for AI data centers).

I think some of the valuation, or agreements made right now are based on future cash flow promises, which are assumed to be higher.