AI Capex Is Off the Charts: Who Stands to Lose?

The discussion centers on the significant capital expenditure by major tech companies in AI, questioning whether this spending is justified and sustainable. Travis Hoium suggests Alphabet's spending is a defensive strategy to prevent disruption, while Jason Hall points out that companies are increasingly funding these investments through debt, marking a shift in balance sheet management. The conversation explores the cases of CoreWeave and Oracle, with CoreWeave's high debt and reliance on future contracts raising concerns about its financial stability. Oracle's substantial backlog, much of it tied to OpenAI, is also examined, questioning whether OpenAI can meet expectations amid competition from companies like Alphabet. The hosts debate whether the current market stage is one of "scorched earth," where companies are aggressively investing without immediate returns.