‘Lehman Brothers of AI’: Why One Critic Thinks OpenAI Will Crash the Entire AI Industry
OpenAI posted $13 billion in revenue against $34 billion in costs in 2025, with a $40 billion SoftBank loan coming due March 2027. Oracle's exposure is documented: Q4 FY2026 Remaining Performance Obligations reached $638 billion, up 363% YoY, with reported free cash flow of negative $23.69 billion against capital expenditures of $55.66 billion. NVIDIA (NASDAQ:NVDA) sits adjacent as the chip supplier, with $119 billion in total supply-related commitments and a disclosed partnership to deploy at least 10 gigawatts of NVIDIA systems for OpenAI. SoftBank has a $40 billion loan coming due in March 2027, per Motley Fool reporting.
Goldman Sachs Warns on AI’s Debt Tsunami — Is the AI Boom?
The six largest AI spenders issued $244 billion in bonds this year, 14 times 2024 levels, as the AI arms race rapidly reshapes balance sheets. Goldman Sachs reports hyperscaler leverage ratios doubled to 1.8x in six months, with $5.8 trillion in projected AI capex through 2030. Credit default swap spreads widened far beyond the broader market, signaling investors doubt AI spending can generate returns fast enough. The six largest AI infrastructure spenders -- Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Meta Platforms (NASDAQ:META), Oracle (NYSE:ORCL), Nvidia (NASDAQ:NVDA), and SpaceX (NASDAQ:SPCX) -- have issued a combined $244 billion in bonds this year, more than double last year's total and 14 times 2024 levels. Goldman Sachs reports that hyperscaler leverage ratios have doubled from 0.9x to 1.8x in roughly six months. Goldman Sachs estimates $5.8 trillion in combined AI capital expenditures for major hyperscalers through 2030, already consuming most operating cash flow and necessitating heavy borrowing.
Oracle Just Hit a Fresh 52-Week Low and Had Its Credit Cut Toward Junk. Has the AI-Capex Panic Overshot?
Shares of Oracle (NYSE: ORCL) touched a fresh 52-week low of $121.50 on Friday. The database and cloud infrastructure company now trades about 63% below its high of $345.72, and its market capitalization has shrunk to about $365 billion. On July 9, S&P Global Ratings cut Oracle's credit rating from BBB to BBB-, leaving the company one notch above junk status. The numbers behind the downgrade are uncomfortable. Oracle spent $55.7 billion on capital expenditures in fiscal 2026 (the year ended May 31, 2026) as it raced to build data centers for AI customers. S&P expects the gap to widen. The agency projects Oracle's fiscal 2027 capital expenditures will reach $90 billion to $95 billion, and it sees the company's free operating cash flow deficit widening to about $42 billion. Oracle already carried nearly $130 billion in borrowings at the end of fiscal 2026. And after issuing $5 billion of mandatory convertible preferred stock in February, the company plans another $20 billion equity issuance later this calendar year. There's a concentration problem, too. S&P noted that roughly half of Oracle's $638 billion in remaining performance obligations (the contracted revenue Oracle has signed but not yet delivered) comes from a single customer: OpenAI. The backlog, concentration risk aside, is extraordinary. Remaining performance obligations ended the year at $638 billion, up 363% year over year and up $85 billion from the prior quarter alone. A year earlier, the figure was about $138 billion. Notably, about $75 billion of the recent large AI contracts involve customers prepaying for graphics processing units (GPUs) or supplying the chips themselves -- an arrangement that shifts some of the build-out's cost off Oracle's books. Management expects revenue to climb about 34% this fiscal year, to $90 billion.
Fed Chair Kevin Warsh, Welcome to Your No-Win Scenario, Courtesy of President Donald Trump
With more than half of 2026 in the books, it's shaping up to be another stellar year for the stock market. Since early June, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and growth-stock-fueled Nasdaq Composite (NASDAQINDEX: ^IXIC) have all powered to record highs. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Fed Chair Kevin Warsh, who officially succeeded Jerome Powell on May 22 as head of the central bank, is being challenged out of the starting gate. In May, trailing 12-month (TTM) U.S. inflation reached a three-year high of 4.2%, prompting questions of whether Warsh and the Federal Open Market Committee (FOMC) -- the 12-person body responsible for setting the nation's monetary policy -- will raise interest rates. Though no one ever said that overseeing monetary policy for the world's largest economy would be easy, Warsh has ascended into a veritable no-win scenario, courtesy of President Donald Trump. President Trump pushes for rate cuts, even as his policies fan the flames of inflation As recently as five months ago, inflation wasn't a top concern on Wall Street. Although Trump's tariffs were modestly pushing up prices in the goods sector (something former Fed Chair Powell alluded to in several FOMC meetings), TTM inflation in February was just 2.4% and moving toward the FOMC's long-term inflation target of 2%. By May, everything had changed. Trump's decision to attack Iran on Feb. 28 resulted in the latter shutting down the Strait of Hormuz to most maritime traffic. This essentially halted the flow of a fifth of the world's petroleum liquids, sending energy prices soaring. Over three months, TTM inflation had jumped to 4.2% -- more than double the Fed's long-term target. Despite the president's policies having a clear inflationary impact, Trump has been publicly calling for the FOMC to slash interest rates for more than a year. Although Powell and the FOMC lowered the federal funds target rate six times from September 2024 to December 2025 to its current range of 3.50% to 3.75%, Trump has opined that interest rates should be cut to 1% or lower. There are probably several reasons for the president to aggressively push for rate cuts: Lower borrowing costs can spur hiring and reduce the unemployment rate. Lower interest rates should fuel the stock market's No. 1 catalyst, the artificial intelligence (AI) data center build-out. Cheaper lending rates would make it easier for the federal government to service its $39.4 trillion in national debt. Even though the Federal Reserve is an independent financial institution operating within the U.S. government, President Trump's ongoing public criticisms have steered his handpicked successor, Kevin Warsh, into a no-win scenario. Heads, Warsh loses -- tails, Warsh loses The next two FOMC meetings, in late July and mid-September, will be especially challenging for the new Fed chair and his peers. Even with crude oil prices notably retracing from their Iran war highs, Core Personal Consumption Expenditures (PCE) -- one of the central bank's favorite inflationary measures, which exclude volatile food and energy costs -- are still climbing. If Warsh, a historic monetary hawk, and his colleagues choose to reverse some (or all) of last year's rate cuts, they'll likely endure a double whammy from President Trump and Wall Street. Mere hours after Kevin Warsh was sworn in as Fed chair, Trump was touting the prospect of lower interest rates during a speech at a New York community college. If the FOMC raises rates in July or September, it'll almost certainly draw the ire of Trump and potentially ramp up his criticism of policymakers. Additionally, rate hikes may put an end to Wall Street's historic AI-driven rally. The AI infrastructure build-out is being partially financed through corporate debt offerings. If Warsh and his peers make borrowing capital more expensive, the pace of the AI data center build-out could slow, forcing Wall Street professionals and everyday investors to rethink AI stock growth rates and premium valuations. But if Fed Chair Warsh and the FOMC stand pat on interest rates in July and September, Warsh still loses. Although economic data is constantly evolving, the persistent climb in Core PCE, coupled with Middle East uncertainty, AI-driven inflation, and Trump's tariffs, all provide ample evidence that a rate hike is necessary to stabilize prices. If Warsh and his peers choose not to act with this bounty of inflationary evidence in front of them, Wall Street and investors may interpret this inaction as something of a capitulation to President Trump's interest rate demands. Even the perception that Donald Trump is influencing the Fed's monetary policy decisions can destroy the credibility the central bank holds dear. As Berkshire Hathaway's now-retired billionaire boss once said, "It takes 20 years to build a reputation and five minutes to ruin it." Even if Kevin Warsh and the FOMC have reasonable justification to hold rates steady in July and September, Trump's ongoing public calls for rate cuts will make it appear as if he has sway with the new Fed chair. Regardless of whether the coin comes up heads or tails in July and September, Kevin Warsh will end up upsetting Donald Trump and/or Wall Street.
U.S. gas prices hit $4 a gallon as U.S.-Iran war resumes
Gas prices in the United States climbed back to $4 a gallon on Monday, according to AAA, as the U.S. and Iran resumed attacks and the threat of prolonged disruptions to energy flows through the Strait of Hormuz intensified. AAA data put the national average at $4.003 per gallon, a jump of about 13 cents versus seven days prior and more than 86 cents above the same date last year. Brent crude, the international oil benchmark, rose above $90 a barrel on Monday. West Texas Intermediate, the U.S. benchmark, was around $84 a barrel. Diesel has followed regular gasoline upward, hitting $5.11 a gallon by Monday, a gain of about 23 cents over the prior week, according to the New York Times. The single national figure conceals sharp regional variation. Motorists across much of the South are paying closer to $3.60, while those in California contend with prices near $5.50 a gallon, according to the New York Times. As prices fell below $4 a gallon in mid-June after the U.S. and Iran signed a deal to reopen the Strait of Hormuz and halt hostilities, analysts warned that depleted global fuel stockpiles and elevated summer driving demand could push prices higher again. That interim agreement did not hold. Washington this week reimposed a naval blockade around Iranian ports in the strait — through which a large share of the world's seaborne oil and gas transits — effectively shutting down most vessel traffic and driving energy prices higher, according to the New York Times.
China’s Rare Earth Curbs Could Trigger $6.5 Trillion Supply Shock for Industries From EVs to Weapons Systems, IEA Warns
China's rare earth export controls could expose $6.5 trillion of production outside the country to supply shocks, the International Energy Agency warned on Thursday, highlighting how small volumes of strategic minerals can threaten large parts of the global economy. Our latest analysis shows that vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable," IEA Executive Director Fatih Birol said. The IEA said automotive production faces the largest direct exposure, at more than $3 trillion outside China, followed by electronics and transport.
BlackRock CEO Larry Fink Warned of an AI Power Crunch—New York Just Halted Large Data Centers: CEG, VST, NEE in Focus
According to a Reuters report, New York Governor Kathy Hochul on Tuesday issued an executive order imposing a one-year moratorium on environmental permits for new data centers consuming 50 megawatts or more. The ban perfectly mirrors the exact scenario BlackRock's Fink warned about, around the same time. Noting that the United States is failing to invest fast enough in its power grids, Fink cautioned, "I actually get frightened when I see states saying we're going to do a moratorium. That's not the answer. The answer is how do we deliver more power quickly?" The Grid Crunch and Utility Stocks The moratorium underscores an energy bottleneck that threatens the AI expansion. With tech hyperscalers racing to build infrastructure, Fink noted that data centers currently cost "$50, $60 billion for a one gigawatt" facility. Fink starkly contrasted the U.S. delays with foreign infrastructure buildouts, warning, "China is building 100GW of nuclear. They're building close to 100GW of solar. They are getting set up for this AI revolution and the need for power. We're not doing this enough."
Amazon: CEO Andy Jassy's Historic $25 Billion Move Is a Massive Signal for Tech Investors (NASDAQ: AMZN)
Amazon sold $25 billion worth of bonds to finance its data center build-out, telling investors it's going all in on the artificial intelligence (AI) build-out. Jassy has some insight into what's coming In Jassy's annual letter to investors, he made the case for Amazon spending $200 billion on data center capital expenditures this year.
These 2 Industrial Stocks Will Benefit From the Trillion-Dollar AI Spending Boom
According to Goldman Sachs and Morgan Stanley analysts, AI-related capital spending by U.S. hyperscalers could reach roughly $800 billion in 2026. Morgan Stanley expects it to rise to $1.12 trillion in 2027. Goldman Sachs expects U.S. data-center power demand to more than double from 31 gigawatts in 2025 to 66 gigawatts in 2027. Management now expects 2026 revenue of $13.5 billion to $14 billion and adjusted diluted earnings per share of $6.30 to $6.40. The company exited the first quarter with an order backlog of about $2.8 billion.
TSMC hikes 2026 guidance as AI demand outpaces capacity
TSMC raised its 2026 capital expenditure forecast to a range of $60 billion to $64 billion, up from $52 billion to $56 billion, an increase of roughly 15%, according to Reuters. TSMC also announced an additional $100 billion investment in Arizona, bringing its total US commitment to $265 billion, according to the Seeking Alpha report.
Down 22% In A Year: Is PayPal A Value Trap Or A Turnaround Play?
With its stock trading at a deep discount, PayPal is betting a new CEO and a major overhaul can fix what’s broken, forcing investors to weigh a potential bargain against a difficult transformation. The company is now in the hands of a new CEO who is candidly acknowledging its “strategic and operational issues” and has kicked off a significant overhaul. Part of that recent stock move follows a Reuters report that Stripe and Advent International had made a $53 billion acquisition proposal at $60.50 per share. However, none of the companies involved has publicly confirmed the reports. On paper, PayPal looks inexpensive. The stock trades at a price-to-earnings ratio of 10.0, a steep discount to the S&P 500’s multiple of 24.2. You see a similar story across other metrics, with its price-to-sales ratio of 1.5 sitting at less than half the market’s 3.3. A discount like this forces a question. One view is that the market has overly punished the stock for past stumbles, creating an opportunity to buy a quality franchise before the new strategy takes hold. The other, more cautious reading is that the market sees the challenges ahead and is pricing them in. With management guiding for non-GAAP earnings per share to decline by approximately 9% in the upcoming quarter, the discount may simply reflect the tough road immediately ahead. For that price, you get a highly profitable and cash-generative payments engine. PayPal’s operating margin of 18.9% and net margin of 15.0% both edge out the S&P 500 averages of 18.4% and 13.0%, respectively. The business is being reorganized into three distinct units: Checkout, Consumer Financial Services, including Venmo, and Payment Services, to simplify a structure the CEO admitted had become complex and slowed down decision-making. The new plan includes a major cost-cutting initiative, with the company expecting to find “at least $1.5 billion of gross run-rate savings over the next 2 to 3 years.” A key part of the strategy is to rebalance focus toward the consumer side of the network, which management believes has suffered from “years of underinvestment.” With debt at a modest 18.6% of its market value and a healthy cash position, PayPal appears well-equipped to fund this transformation from its own operations. During the 2022 inflation shock, the stock fell a striking 64%, far worse than the S&P 500’s 24% drop, and it has yet to reclaim its prior high. While it weathered the 2020 pandemic crash slightly better than the market, its performance in the most recent downturn suggests a high degree of risk if market sentiment sours. This isn’t a stock that simply drifts down with the tide; it has shown it can sink much faster.
Wall Street plunges in AI ‘bloodbath’
The Philadelphia Semiconductor Index fell by as much as 5.7% Friday, in a reversal of the surge that saw the index more than double in just three months. Shares in chip giants including Marvell Technology Inc., ARM Holdings Plc, and Intel Corp. have all plunged more than 30% over the past month. Strong results from TSMC, the world's top advanced AI chipmaker, and ASML, the leading supplier of high-end chip-making equipment, have done little to ease concerns over the durability of the chip-stock rally. The Philadelphia SE Semiconductor index, a barometer of the sector, hit a nearly two-month low on Thursday and was set for its worst week since March last year. The gauge has shed more than 19pc from its late June record. Taiwan's Taiex index had shed 6.5pc after $2tn chip giant TSMC fell by 7.3pc a day after announcing record second-quarter profit but higher than expected spending plans.