🤖 AI Bubble Loan and Private Equity Loan Market Crisis Briefing
The AI bubble theory has recently reignited with expectations for AI technological innovation, with warnings of potential risks in the private equity market, particularly related to excessive borrowing by big U.S. tech companies.

1. Background of AI Bubble Theory and Big Tech’s ‘AI Debt-to-Debt’ Problem

• Astronomical AI Infrastructure Investments: As competition for AI hegemony intensifies, big tech companies (Alphabet, Meta, Amazon, Oracle, etc.) are spending huge Capex to build AI infrastructure, including securing data centers and GPUs. Morgan Stanley predicts that AI infrastructure will need a total of $3 trillion by 2028.
• Overfinancing (debt): To cover this funding, big techs have significantly increased the size of corporate bond issuance (some estimates are more than $200 billion).
• Leveraging Private Equity and Complex Procurement: As corporate bonds alone fall short, companies are mobilizing complex and opaque private equity methods, including the establishment of a joint venture (SPV) with Private Equity (PE), Project Financing (PF) and Asset Mortgage (CMBS).
• The problem: Funding through SPV is difficult to accurately determine the size of the debt because no debt is directly revealed in Big Tech’s financial statements, and there are warnings that the potential impact on financial markets as a whole could be greater in the event of a crisis.
• Credit Risk Concerns: It is pointed out that if AI demand is weaker than expected or the value of technology assets such as GPUs plummet, it could signal the collapse of the AI bubble, with high financial risks, increased concerns about loan defaults. Some investment banks are already downgrading their investment in technology stocks and avoiding risks.

1. Crisis in the Private Equity Loan Market
   Apart from the issue of AI investment, the private credit market itself is being pointed out as a new crisis detonator for the U.S. financial market.

• Rapid Growth and Scale-Up: The U.S. private equity loan market has an AUM of $2.1 trillion (as of 2025), exceeding the existing high-yield bond market ($1.4 trillion). This is the result of non-banking financial institutions (such as private equity funds) increasing lending instead of banks due to stricter banking regulations after the global financial crisis.
• Opacity: Private equity loans often have private investment information and have a complex transaction structure, which has the disadvantage of having a high vulnerability to transfer (傳移) in the event of a crisis.
• Warning: Some experts, including Gundlak, dubbed the “bond king,” are warning that the next financial crisis could originate in the private equity market.

1. Key Players Buying Private Equity Loans (Fund Source)
   The main investors (the “buy side”) who supply funds in the private equity market and therefore may be exposed to potential risks are mainly institutional investors.
   | Key Investor | Features and Roles |
   |—|—|
   | Private Debt Funds | Key players in which management companies (GP) raise funds from investors (LPs) and provide loans directly to companies and others |
   | Pension Funds | One of the biggest investors in private equity loans. We put people’s retirement funds into private equity loans in anticipation of stable cash flow and high returns. In particular, the exposure of big tech to capital expenditures related to AI themes is expanding in all directions
   | Insurance companies | Invest in private equity loans using customers’ premiums as a resource. We expect stable returns and interest rate risk diversification effects
   | Other institutional investors | Other large institutional investors such as sovereign wealth funds and university funds are also actively participating in the private equity loan market |
   In summary, the large-scale financing of AI Big Tech in the U.S. is coupled with a sharp expansion of the complex and opaque private equity market, with concerns that the ultimate risk of these loans could be passed on to institutional investors such as pension funds and insurers around the world.