Wall Street blows past bubble worries to supercharge Al spending frenzy

Firms such as Blue Owl Capital have raised trillions in investing firepower. The AI build-out is a perfect match, though warning signs are flashing.

- Matt Wirz & Peter Rudegeair

A view of the Stargate artificial intelligence data center complex in Abilene, Texas. Investor appetite for data-center debt is so strong that some money managers have booked billion-dollar gains in a matter of days, even before construction of the facilities they are financing is complete.

(AP)

Not long ago, Blue Owl Capital was an upstart investment firm that lent money to midsize U.S. companies such as Sara Lee Frozen Bakery.

These days, the firm is financing massive data centers costing tens of billions of dollars for the likes of Meta and Oracle—a sign of just how quickly Wall Street has become the enabler of America’s artificial-intelligence boom.

Fund managers such as Blue Owl amassed trillions of dollars of investing firepower and have been hunting for big deals where they can put that money to work. They found slim pickings for years until a perfect match appeared in AI, which has provided a bigger target than anything in history due to the vast sums tech companies need to ramp up computing power.

“We're talking about numbers that are so large, even in the low cases,” said Blue Owl co-founder Marc Lipschultz. “Does it even matter if you keep counting after you get to $1 trillion of capital expenditure in the next couple of years?”

Last week's selloff in tech-related stocks and bonds marked some of the most serious warning signs that the frenzy could be overdone. But any worries on Wall Street about a possible investment bubble have largely been trumped by the fear of being left behind. Lipschultz and co-founder Doug Ostrover jumped into the fray at a posh retreat in California’s Ojai Valley for dozens of tech VIPs and celebrities in the spring of 2024. Meta CEO Mark Zuckerberg and Microsoft CEO Satya Nadella were there, along with Pharrell Williams and Serena Williams.