Wall Street Wants To Securitize AI. Have We Forgotten 2008?

Wall Street wants to turn artificial intelligence compute into an investable asset class. This promises to unlock capital for a costly technological transition, addressing capital scarcity, which represents one of the limits currently imposed on the AI boom. Nearly twenty years ago, the industry also saw an opportunity to bundle subprime mortgages into securities and, in doing so, the financial system began distributing risks that were poorly understood.

In a recent Wall Street Journal opinion piece, BlackRock CEO Larry Fink highlighted the risk to the AI boom presented by a limited supply of capital. He is advancing a vision in which the capacity embodied in chips and data centers can attract capital far beyond the companies building them. This mirrors what Nvidia CEO Jensen Huang told CNBC in August when he stated that the company’s “AI factory platform is really an investable asset.” Financing could be raised against equipment and contracted computing revenues, with standardized instruments eventually making exposures easier to pool, rate and trade.

Strain Is Showing on AI Financing

A look into CoreWeave, a cloud provider that rents AI computing capacity, exposes how strong AI demand can coexist with financial strain and highlights the limits of market risk tolerance. The company used its $104 billion in contracted revenue backlog as proof of a healthy business model, but delivering that capacity will require substantial investments in advance of customer payments. Servicing the debt is widening the gap to profitability, with second-quarter net interest expense reaching almost a quarter of the firm’s revenue. Jim Osman argues here at Forbes that the focus should be on how much cash remains after equipment, power and creditors are paid.

Pooling these exposures would redistribute that risk without eliminating it.