Financing the AI boom: from cash flows to debt

Key takeaways 

• Investment related to artificial intelligence (AI) is surging – both in nominal amounts and as a share of GDP – and currently accounts for a substantial share of economic growth.
• The size of anticipated investment needs will require firms to shift the source of financing from operating cash flows to debt, with private credit playing a rapidly increasing role.
• While macroeconomic and financial stability risks from the AI boom appear moderate, the boom's sustainability hinges on AI firms meeting high earnings expectations. The fact that equity prices have run far ahead of debt market pricing underscores this tension.

The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks.