Most bubbles occur due to excessive levels of credit offered too cheaply, resulting in a whole bunch of defaults happening at the same time. All the major AI players have borrowed money to buy GPUs and build data centers and have used Special Purpose Vehicles to do it so the debt doesn't fall on their own balance sheet, probably using a certain amount of stock as collateral. If the SPV defaults, could that trigger a big sell-off?

The question is, a sell off for who?

If they’ve securitized and sold their data center buildout, will the big clouds and AI labs actually face any severe impact? While the sums are huge, most of these companies have the cash on hand to pay down the debt. The big AI labs have said their models earn enough to cover the cost to train themselves, just not the next one. This means they could at any time walk away from the compute spend for training.

With the heavy securitization of all these deals, will the “bubble pop” just hurt the financial industry?

If a company like CoreWeaver sees their SPV for a Microsoft-specific data center go bankrupt, that means MSFT decided to walk away from the deal. Red flag for the industry, but also a sign of fiscal restraint. Someone else can swoop in and buy the DC for cheap, while MSFT avoids the Opex hit. Seems like the losers will be whoever bought that SPV debt, which probably isn’t a tech company.