As the Credit Market Falters, AI’s Growth Machine Keeps Running

As if Wall Street needed something else to worry about in 2025… now we face a “credit crunch.” 

Lately, markets have been rattled by a spate of unsettling headlines. One regional bank, Zions Bancorporation (ZION), disclosed tens of millions in fraudulent loans. Another, Western Alliance (WAL), is suing a borrower over bad collateral. Subprime auto lender Tricolor went bust. Major auto parts supplier First Brands filed for bankruptcy.

All that in the past few weeks. 

Cracks are clearly forming in the credit market. 

These incidents, of course, spooked Wall Street. Folks are dusting off the old phrase, “credit cockroaches”; because if you see one, there are probably more. So, investors extrapolated. If regional banks and consumer credit are cracking, what does that mean for corporate credit? Commercial real estate? The broader economy?

Does it mean the great AI spending boom is about to hit a wall?

In short, we don’t think so.

In today’s issue of Hypergrowth Investing, we take a look at this credit pressure, why it’s unlikely to derail AI investment, and how the current bout of market choppiness is offering a textbook buying opportunity…

Why Credit Market Stress Won’t Derail AI’s Biggest Builders

The AI buildout is capital-intensive. 

Data centers cost billions. Racks of Nvidia (NVDA) GPUs are sold in the tens of millions of dollars per shipment. Power and cooling infrastructure is so costly that utilities are having to rethink grid design.

A lot of smaller players – startups, specialized data center firms, second-tier cloud providers – have leaned on debt markets to fund that expansion. CoreWeave (CRWV), for instance, has raised billions of dollars in debt financing, and a meaningful portion of that is structured around its GPU inventory and long-term cloud/AI contracts as backing. For them, higher credit spreads or tighter bank lending could be a serious headwind.

But the hyperscalers – Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta (META) – are driving 80- to 90% of the AI boom, putting them in a completely different category.

• Microsoft has over $80 billion in cash and generates $65- to $70 billion in free cash flow annually. That alone could fund multiple years of $30 billion-plus AI capex without borrowing a dime.
• Alphabet sits on $100 billion in cash with a net cash position (i.e., more cash than debt outstanding).
• Meta, after “year of efficiency” cost cuts, is throwing off $45 billion a year in free cash flow – plenty to build out LLaMA datacenters.
• Amazon Web Services is so cash-rich that its parent company is redirecting free cash from e-commerce into AI capex.

These balance sheets are fortresses. Higher interest rates or a credit crunch in autos won’t stop these companies. They don’t need to tap strained credit markets to fund their AI buildouts. They can self-fund. 

That’s a key disconnect investors are missing: regional banks may wobble, but Big Tech’s cash piles make them largely immune to any credit squeeze.

AI Is Essential – Even in a Credit-Constrained Economy

When the economy slows, companies cut “nice-to-have” projects. AI is not in that bucket.

For Big Tech, AI is existential.

• Microsoft needs AI to keep its Office franchise sticky and fend off Google Workspace.
• Google needs AI to defend its search moat against ChatGPT-style assistants.
• Meta needs AI to improve ad targeting and power its vision of an “AI-first” social ecosystem.
• Amazon needs AI to optimize logistics, personalize retail, and keep AWS at the center of enterprise IT.

Cutting AI spend would be like an oil company deciding not to drill new wells. It’s the lifeblood of their future revenues.

That’s why – even in a world where some credit channels seize up –you won’t see hyperscalers pulling the plug on $10 billion datacenter clusters. At most, they’ll adjust the pace, staggering projects quarter to quarter. But the strategic imperative is too strong to stop.

For investors, that means the AI CapEx wave isn’t going away. If anything, it becomes more concentrated in the hands of the strongest players.