The Financial Post reports in its Tuesday, Nov. 3, edition that the Canada Pension Plan Investment Board's (CPPIB) global head of credit investments, David Colla, warns of "bubblelike" exuberance in artificial intelligence financing.
A Bloomberg dispatch to the Post reports that the CPPIB continues to finance AI-tied projects, including those involving CoreWeave, the largest of the so-called neoclouds that lease out AI chips. But the CPPIB, whose AI investments make up about 3.5 per cent of its credit portfolio, is becoming increasingly selective about such bets.
Mr. Cola says: "There will be winners and losers along the way. And there's going to be a lot of volatility."
Fears of an AI crash have pervaded the market, in part because of the circular financing embedded in many debt packages. Tech giants including Nvidia, Amazon and Microsoft are bankrolling AI upstarts that rely on the larger companies' products. That amplifies the backers' exposure and sets up a potential domino effect if some AI companies go under.
Mr. Colla says the CPPIB is also scrutinizing the growing use of off-balance-sheet financing structures in which firms create shell companies to take on the debt necessary to build data centres.
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