Analysis: nine top tech companies including Alphabet and Meta had ~$3T of AI-related off-balance-sheet commitments, far exceeding their $600B in reported capex (Wall Street Journal)

In mid-August, tech giant Nvidia unveiled a $500 billion initiative to partner with Wall Street's leading investment banks in financing the AI boom. However, not all were convinced by this development. Jeff Gundlach, the founder and CEO of DoubleLine Capital, expressed skepticism about the $500 billion fund, stating it "will not likely age well" in a post on X. He questioned the logic of using "assets of unknown life" as collateral in the financial arrangement.

Gundlach, known as the "Bond King" for his expertise in mortgage-backed securities, compared the AI bet to a warehouse full of bananas, saying, "Why not do a 30-year ABS deal backed by warehouses of bananas? It's OK, they'll be newly engineered bananas of unknown life." Nvidia CEO Jensen Huang announced the partnership with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR, aiming to raise massive capital for AI-related infrastructure.

However, Gundlach's concerns highlight the anxiety within investment circles about the profitability of AI investments.