Cracks in the A.I. Borrowing Binge

ImageAndrew here.The midterm elections are officially upon us, and many polls and prediction markets suggest that Democrats could win the House and the Senate.

Will they be right? We’ve got an updated list of all of the big campaign donors this morning.It will be worth watching whether their money influences the outcome.Also, an interesting tidbit this weekend at the Breeders’ Cup: Deterministic, the winning horse in the Breeders’ Cup Mile, is owned by a partnership that includes Kevin Warsh, the Fed chairman, and Ken Langone, a founder of Home Depot.How long will the bounce last? The global tech trade is rebounding on Monday.

But the relief rally could be short-lived as worries persist over whether the tech giants’ multitrillion-dollar bet on artificial intelligence will pay off.More bad news came late last week as OpenAI was forced to cut what it is seeking in an upcoming funding round by $10 billion, and to reduce its valuation target to $1.25 trillion from $1.4 trillion, The Financial Times reported, citing unnamed sources.The Wall Street Journal, citing unnamed sources, added that OpenAI had so far raised less than half of the $30 billion it was initially seeking.The A.I.

lab, which is expected to file to go public as soon as next year, gave investors a Friday deadline to commit to the round, The FT added.The latest:Nasdaq Composite futures point to a solid open.But the tech-heavy index fell 5.3 percent in October, its worst one-month swoon since March 2025.A.I.

bellwethers like Alphabet (down 18.7 percent in October) and Meta (down 15.2 percent last month) sold off especially sharply.Barclays, BNP Paribas and Deutsche Bank are managing Alphabet’s latest euro-denominated bond offering to help fund its A.I.buildout, Bloomberg reports.The borrowing binge has roiled parts of the market.

There’s a booming trade in investors seeking hedges or insurance against a wider downturn in the tech and A.I.trade.

And S&P Global Ratings downgraded Meta’...