Rising rates may strain AI firms’ debt and growth, analysts warn
Analysts warn that higher interest rates from the US Federal Reserve and other central banks could intensify pressure on AI companies, which have borrowed heavily to fund expansion. Charles Lagares, COO of EBC Financial Group, told HotMinute that AI valuations rely on future profits, making them vulnerable to rising borrowing costs. Global AI-related debt issuance reached $450 billion by early…
Key points
- Global AI-related debt hit **$450 billion** by early September, per Morgan Stanley’s estimate
- Higher interest rates may force AI firms to cut spending or sell assets if revenues lag
- Lenders charging more for AI-linked loans could signal growing market risk
Lagares highlighted two key risks: whether AI revenues can cover rising interest payments on borrowed capital, and whether lenders are charging higher rates for AI-linked borrowers. A widening gap in interest rates would signal increased risk, making future AI infrastructure projects more costly to fund. The FPC also warned that AI financing could ripple through UK startups and data centers, further complicating access to capital for smaller players.
The story so far
2 episodes →- Rising rates may strain AI firms’ debt and growth, analysts warnthis story
Higher interest rates add to fears of AI bubble popping
hotminute.co.uk · 6 November 2026
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