The AI trade is swallowing the market
· Axios
AI is concentrating stocks, bonds, private credit — and even the broader economy — around a single bet.
Why it matters: Tech companies are projected to issue over $1 trillion in debt to fund their AI goals this year. Yet there's little evidence the technology can be monetized at a scale that justifies the bet.
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State of play: Hyperscalers — the AI data-center giants — could spend up to $700 billion from their balance sheets on AI this year, while issuing eye-popping debt to access even more capital, according to UBS.
- The eight largest companies, all tech firms with AI ambitions, make up nearly half of the S&P 500.
- More than half of invested venture-capital dollars went to AI firms in 2025, per PitchBook.
- Private credit could supply half of the $1.5 trillion needed for data-center buildouts, according to Morgan Stanley. That will further concentrate AI into the alternatives market.
Between the lines: AI is sucking up all the oxygen, and dollars, making it harder to hedge exposure to the trade.
- "It has been very, very hard for investors to diversify," Sonali Basak, chief investment strategist for iCapital, told Axios. She said diversification is a key topic in all her meetings with investors.
Zoom in: Anthropic recently raised $30 billion at a $380 billion post-money valuation, making it the world's fourth-most valuable private tech company.
- The Claude creator hit a $14 billion revenue run rate this month, growing 10x annually over the past three years.
- But CEO Dario Amodei has warned that sales may not keep up with the compute treadmill, as next-generation models could eventually cost up to $100 billion to train.
- For investors, it isn't about whether AI is real or effective. It's whether monetization can sustainably outrun a $100 billion training bill.
Threat level: If AI can't be monetized effectively, investors will quickly move to reprice the value of Big Tech, reverberating across:
- The stock market: AI stocks were responsible for about 70% of the S&P 500's 2025 gains, according to JPMorgan. If those stocks fall, so does the market.
- The economy: AI capex drove over 90% of economic growth in the first half of 2025, Harvard economist Jason Furman says. If investors sell shares of these companies, that could weigh on their stocks, forcing executives to slow spending, which could then weigh on GDP.
- Entire financial systems: Private credit's heavy exposure to AI is no longer isolated. As the sector takes up a larger share of bank, insurance, and retail investments, Moody's warns that a hit to AI could trigger a wider "contagion" across the entire financial system.
Yes, but: Nobody wants to be the one who sat out: Basak said investors are still looking for an attractive entry into the AI trade.
- High risk, high reward, etc.
The bottom line: The first rule of investing is diversification. AI is making that nearly impossible — and few are pricing in what happens if the bet doesn't pay off.