‘At some point it’s going to be too much’: global financiers grapple with AI risks
The artificial intelligence boom is creating an unprecedented demand for capital and infrastructure, raising questions about whether debt markets, power grids and corporate productivity can keep pace with the technology’s expansion, executives of global asset management firms warned at a Hong Kong summit. Investment in AI infrastructure could reach US$10 trillion over the next five years,…
Global asset management executives gathering in Hong Kong cautioned at a financial summit that the rapid proliferation of artificial intelligence poses significant challenges to debt markets, power grids, and corporate productivity. Emmanuel Roman, CEO of Pimco, warned that AI infrastructure investment could surge to US$10 trillion within five years, mirroring the scale of the US$12 trillion US bond market.
Roman likened this technological shift to Britain's Industrial Revolution in 1760, noting that interest rate hikes or geopolitical tensions could trigger a downturn.
Jonathan Gray, president and COO of Blackstone, highlighted the mismatch between the demand for computing infrastructure and its supply, with projects backed by 15- to 20-year contracts from major tech firms. This imbalance could render debt investors unable to capture potential upside if these companies succeed. "You're playing for repayment and coupon," Gray observed.
Bob Prince, co-CEO of Bridgewater Associates, emphasized the need to develop sufficient computing capacity to meet AI's demand, projecting a 30-fold increase by 2028. This would require an additional US$2 trillion in annual global revenue to absorb the capacity, according to Prince. Bridgewater remained highly optimistic about AI's potential, with Bridgewater heavily invested in the technology.
Bruce Flatt, CEO of Brookfield, warned that electricity may become the primary bottleneck, as building new power generation, including nuclear plants, could take seven years. Flatt described the shortage of electricity as "the opportunity of a lifetime" for infrastructure investors who can deliver new supply.
Regarding AI's impact on productivity, Franklin Templeton CEO Jenny Johnson stated that the main hurdle often lies in persuading employees to adopt the technology. However, AI has allowed the firm's distribution staff to serve 23% more clients, resulting in 11% more sales. General Atlantic CEO Bill Ford noted that the investment case rests on whether companies can convert AI spend into enduring efficiency gains, acknowledging that technology cycles typically involve about five years of disruption before delivering returns over the next 20 to 30 years.
JPMorgan Chase vice-chairman Daniel Pinto maintained a bullish stance on AI's productivity potential but cautioned that revenue growth needed to justify current valuations could be "a bit too fast." Pinto suggested during a separate panel that a correction in AI stocks could reverberate across other sectors.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
