JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon stated that the rapid expansion of artificial intelligence spending is competing with heavy government borrowing for capital, leading to rising interest rates.
Speaking on Bloomberg Television, Dimon said, "Rates are going up. A lot of demand for capital, a lot of government financing." He noted that the government is borrowing approximately $2 trillion again, a figure that competes with the capital needed for the AI buildout.
Dimon cited JPMorgan estimates that AI capital spending could rise from roughly $700 billion this year to $1 trillion next year. He identified the risks involved as including the physical buildout, monetization, and the cost of capital itself. He specifically mentioned changing AI models, semiconductors, shifting schedules, and lawsuits over data-center construction as factors adding to the complexity.
Reuters reported that five of the largest AI hyperscalers have issued about $220 billion of debt this year, more than double the total from the previous year. This surge in borrowing has impacted cash flow unevenly among major tech companies. Alphabet (NASDAQ: GOOGL) reported its first-ever quarter of negative free cash flow, burning $5.9 billion in the second quarter, and raised its 2026 capital spending forecast to as much as $205 billion. Amazon (NASDAQ: AMZN) lifted its 2026 plan to about $220 billion, resulting in a trailing 12-month free cash flow of negative $7.6 billion. Microsoft (NASDAQ: MSFT) generated $19.6 billion of free cash flow in the June quarter despite $41 billion in capital expenditures.
Dimon acknowledged that riskier borrowers are also tapping credit markets. Goldman Sachs reported $88 billion of lower-rated AI-related borrowing this year as companies finance data centers and computing infrastructure. The 10-year Treasury yield recently touched 5.34%, its highest level since 2002.
Despite these concerns, Dimon expressed confidence in the long-term value of the AI buildout. He compared it to the internet era, stating, "in total, it pays off." He added, "AI itself, I think, creates a lot of value," and said he is not worried about the spending.
Market prediction platforms also reflect a low probability of an immediate downturn. Polymarket puts the chance of an AI industry downturn by Dec. 31 at about 6%, with roughly $2.43 million traded on the outcome.
