Time BNB Signal Analytics
Time BNB Signal Analytics
The AI industry is racking up debt faster than it’s generating revenue, and that should make everyone nervous. A recent report highlights that companies supplying data centers, chips, and processing power to OpenAI (the darling of the AI world) have amassed a staggering $96 billion in debt. That’s a lot of zeros, and it raises serious questions about the sustainability of the current AI boom. According to OpenAI's Partners Rake Up $96 Billion Debt as AI Industry's Borrowing Trend Escalates, this borrowing trend is escalating rapidly.
The core issue? Revenue isn’t keeping pace with the massive infrastructure build-out required to fuel these AI models. OpenAI, for instance, has pledged $1.4 trillion to secure the necessary energy and computing power, yet anticipates generating only $20 billion in revenue this year. That's a massive discrepancy (a shortfall of $1.38 trillion, to be precise). HSBC estimates that even if OpenAI hits $200 billion in revenue by 2030, they’ll still need another $207 billion in funding. Where's that money coming from?
OpenAI’s partners, including names like SoftBank, Oracle, and CoreWeave, have already borrowed significant sums. Blue Owl Capital and Crusoe have taken out $28 billion in loans, with another $38 billion under negotiation with Oracle and Vantage. That’s $66 billion between just four entities. This shift towards debt financing is a relatively new phenomenon. Traditionally, big tech firms like Microsoft, Alphabet, Amazon, and Meta funded AI development directly from their own balance sheets. But even these giants are feeling the pressure.
The big five hyperscalers—Amazon, Google, Meta, Microsoft, and Oracle—have collectively accumulated $121 billion in new debt this year alone to fund AI operations. That’s more than four times the average debt level they issued over the past five years. It’s a clear signal that the AI arms race is becoming increasingly expensive, and companies are turning to debt to stay in the game. And this is the part of the report that I find genuinely puzzling: are these companies truly expecting AI to generate returns that justify this level of debt, or are they simply caught up in a hype cycle?
While AI companies are struggling with debt, e-commerce faces a different set of challenges: rising fraud and declining consumer confidence. In Malaysia, for example, online shopping issues have been the top category of consumer complaints since 2015, with a surge during the pandemic that shows no signs of slowing down. Fomca, a consumer group, reports a high number of complaints involving fake sellers, scam transactions, and unregulated online storefronts. Online shopping still a risky business, according to recent reports.
National enforcement data reveals thousands of online fraud cases each year, resulting in millions in losses. Bukit Aman’s Commercial Crime Investigation Department (CCID) reported a 97% surge in e-commerce crime in Malaysia during the first 10 months of this year, with total losses reaching RM110.3 million (that's about $23.5 million USD). And that's just the reported cases. The actual scale is likely much larger, as many victims don’t bother to file formal reports.
One particularly troubling trend is the rise of cash-on-delivery (COD) scams. Consumers receive the wrong, fake, or low-quality product but are pressured to pay on the spot. Once payment is made, the seller becomes unreachable. It’s a reminder that online fraud isn’t limited to prepayment transactions.
Meanwhile, China's Singles' Day sales festival – once a reliable indicator of consumer enthusiasm – is showing signs of "muted" sentiment and sales expectations. Consumer malaise, stemming from a prolonged property crisis and income security concerns, is making it harder to get people to open their wallets. Retailers are responding with year-round discounting and elongated sales events, but the "sales spike" isn't as strong as it used to be. Last year's sales totaled 1.44 trillion yuan (about $202 billion), but major platforms like Alibaba and JD.com haven't disclosed total Singles' Day sales for several years (perhaps because the numbers aren't as impressive as they once were?).
Ultimately, these trends point to a fundamental tension in the current economic landscape. On one hand, we have the AI industry, fueled by massive debt and the promise of future returns. On the other, we have e-commerce, grappling with fraud, declining consumer confidence, and shifting spending patterns.
Is AI a legitimate investment opportunity, or a bubble waiting to burst? Will e-commerce adapt to the changing consumer landscape and rebuild trust, or will fraud continue to erode its potential? These are the questions that investors and consumers alike need to be asking. The answers may determine the fate of these two industries – and the broader economy – in the years to come.