Debt financing in AI is a signal tech’s bull market is ‘getting weaker and weaker as the days go by,’ Morgan Stanley CIO says
Meta’s $30 billion debt-financed deal for a gigantic AI data center in Louisiana is an example of how “the landscape has suddenly gotten a lot, lot, lot more complicated” for tech stocks going forward, Morgan Stanley Wealth Management chief investment officer Lisa Shalett told Fortune.
The Meta agreement is the largest private debt deal ever, according to the Wall Street Journal. Eighty percent of the Hyperion data center in Richland Parish, La., will be owned by Blue Owl Capital, with Meta retaining only a 20% stake. The site will technically be owned by a special-purpose vehicle, and thus will not appear on Meta’s balance sheet. Morgan Stanley was the bookrunner that put the deal together, according to Bloomberg.
The deal is a departure from the way AI has been funded in the past, Shalett said. Previously, investment came directly from the cash on big tech companies’ balance sheets. Now, with off-balance-sheet debt in the picture, companies will come under increased pressure to show a return on their investments, she said.
Debt financing in AI is a signal tech’s bull market is ‘getting weaker and weaker as the days go by,’ Morgan Stanley CIO says |
