Paul Krugman says billions in AI borrowing will hit a 'Wile E. Coyote moment' as lenders get cold feet

The hyperscalers' spending blitz around the AI boom only gathered momentum this year, even as tech giants switched to financing it with a flood of new debt instead of relying on their massive profits. Nobel Prize-winning economist Paul Krugman thinks that source will soon run dry and put an end to various AI-related projects. "First, the money to fund all this AI investment spending simply won't be there," Krugman wrote in an Oct. 29 Substack post. He observed that the early financial groundwork stemmed from industry giants such as Google and Microsoft, which once drew on existing earnings.