S&P: AI Debt May Exceed What Companies Disclose
Mark Habib from S&P Global warned that AI-related debt could exceed public disclosures, with spending on data centers expected to surpass $7 trillion.
Mark Habib from S&P Global said it is safe to assume that AI-related debt is greater than public disclosures reveal.
S&P expects the top six US cloud computing companies to spend more than $7 trillion on data centers and AI-related capital expenditures between 2025 and 2030.
Habib noted that these companies will record negative free cash flow until at least next year.
On the other hand, he said S&P does not currently see a disconnect that warrants changing credit ratings.
What do these terms mean?
Free Cash Flow: The money a company has left over after deducting operating expenses and capital investments, used to measure its ability to expand or pay off debt.
Credit Rating: An independent assessment of an entity's ability to meet its financial obligations, which affects borrowing costs.
Capital Expenditure: The funds allocated by a company to purchase or build long-term assets such as data centers and equipment.
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