Taken from NATO magazine

Emphasis mine

CoreWeave’s business model consists of buying up lots of high-end computer chips, and building or leasing data centers to house those chips. It then rents out those assets to AI companies that need computing power but prefer not to take on the huge up-front costs themselves. If this is straightforward enough, CoreWeave’s financial situation is anything but. The company expects to bring in $5 billion in revenue this year while spending roughly $20 billion. To cover that gap, the company has taken on $14 billion in debt, nearly a third of which comes due in the next year. Many of these loans were issued by private-equity firms at high interest rates, and several use complex forms of financial engineering, such as giving the money to newly formed legal entities created for the explicit purpose of borrowing on CoreWeave’s behalf (more on that later). CoreWeave also faces $34 billion in scheduled lease payments that will start kicking in between now and 2028.

So the various sectors of the ai market (chip maker, data centers, ai software companies) are all extremely overleveraged and have taken on immense amounts of debt to build their businesses on the hope that people will become dependent on their product by the time lenders start calling in their debts.

It’s also approaching “too big to fail” status like the auto industry and home loan/banking industry, so when it fails, the American taxpayer will be footing the bill.

I think nvidia (or maybe openai) will have to start paying back something like $100 billion starting this September(?) source? I think I heard it on a podcast