Financial Times warns higher interest rates could cool AI investing

In short: A Financial Times opinion column argues that higher interest rates could weaken today’s strong investor excitement around AI.

What's going on

Ruchir Sharma, chair of Rockefeller International, writes that “the price of money” still matters, even for popular tech trends like artificial intelligence. Interest rates are the cost of borrowing money, like the interest you pay on a credit card or mortgage. When that cost goes up, it gets harder for companies and investors to justify big bets.

Sharma points to record levels of global debt, especially government debt. He argues this can limit how much money is available for companies, because businesses may end up competing with governments for funding. He also says higher rates can lead to a “liquidity squeeze,” which is a period when money becomes harder to get (like a bank becoming pickier about who gets a loan).

The column says large technology companies are spending heavily on data centers, which are buildings full of computers that run AI services. Sharma estimates AI-related corporate borrowing could exceed $600 billion in 2026, up about ten times from 2024. He adds that investors are already asking weaker borrowers in the AI supply chain to pay higher returns to borrow.

What to watch

Sharma argues that bubbles often deflate slowly, not all at once, and that higher rates can take time to hit the wider market. If US interest rates rise again, he suggests lenders and investors may become even more cautious, which could slow AI spending and put pressure on AI-linked stocks.

Source: Financial Times