Bernie Sanders slams big tech AI debt; warns on risky bets

Senator Bernie Sanders has sounded the alarm on technology corporations' escalating AI expenditures. Over the past few quarters, major tech firms like Microsoft, Meta, Google, Amazon, SpaceX, Oracle and Nvidia have substantially increased their capital expenditure, with Wall Street reacting negatively and causing billions of dollars in stock value losses.

According to Reuters, over $2 trillion in market value is set to be wiped from the tech-focused Nasdaq 100 this month due to mounting investor concerns over whether the billions invested in AI will yield quick returns.

Senator Sanders criticized these companies for their "risky AI bets," stating on X that they should not expect taxpayer bailouts if their AI investments fail. He emphasized that technology giants Microsoft, Meta, Google, Amazon, SpaceX, Oracle and Nvidia have accumulated $3 trillion in debt to finance their high-stakes AI gamble.

The Nasdaq 100, a stock market index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market, is expected to shed more than $2 trillion in market value this month as Big Tech earnings intensify investor scrutiny on the profitability of their AI investments. The index has already dropped more than 5.8% in October as AI-related turbulence has taken its toll on hyperscalers such as Meta Platforms, Alphabet and Amazon.com, which have boosted their spending forecasts and expanded AI infrastructure.

The market reacted sharply on Thursday as Alphabet experienced its largest single-day percentage decline ever, driven by slowing growth in its core search advertising unit and rising cash burn. Meta also rattled investors with a plan for a record $97.5 billion capital raise, raising concerns about potential equity dilution and external financing reliance to fuel the AI race.

As AI spending becomes increasingly reliant on debt, it poses a new risk for investors, challenging the notion that these companies are insulated from broader macroeconomic pressures. While Microsoft and SpaceX reported positive results, indicating that AI spending might begin to generate revenue, the focus now shifts to Apple's earnings report next week and Nvidia's mid-November update, which analysts view as crucial indicators of hardware demand amid cooling sentiment in the broader tech sector.