Interest Rate Hike: AI Faces Increased Funding Risk

The rise in global bond yields is making the financing of AI infrastructure riskier. In this context, a strategist from Panmure Liberum anticipates a potential bubble burst in 2027 or 2028, while major companies are resorting to borrowing and leasing to support the ongoing boom.

Rising Yields Make AI Financing Riskier

The increase in global bond yields is making the financing of AI infrastructure more precarious. Bond yields are rising rapidly in the second half of 2026, driven by persistent inflationary pressures and significant public debt issuance. In this environment of rising capital costs and higher rates, midterm elections and the war will determine who can continue to finance AI deployments.

Possible Bubble According to Panmure Liberum, with a 2027-2028 Horizon

The chief market strategist at Panmure Liberum believes that the AI bubble could burst in 2027 or 2028. He notes that a significant amount of capital is being invested in resource-intensive cutting-edge models. According to him, local AI and smaller language models could take precedence. He aligns himself with a growing group of analysts skeptical about the sustainability of the current momentum, a thesis he recently presented in the media.

Structural Fragilities Weigh on Deployment

The AI sector faces several structural weaknesses: monetization deficits, margin debt with soaring yields, circular financing from suppliers, and concentration concerns. These factors make the deployment of AI infrastructure more uncertain. In this context, major tech companies are borrowing and leasing to support the AI boom. MacroVisor, which claims a top-down approach to markets and rigorous, accessible research for investors, analyzes these dynamics. Ayesha Tariq is a macroeconomic analyst based in Dubai.