Wall Street is driving explosive AI growth. But millions of Americans could be in the blast zone if the bubble bursts, even if they’re not invested

If you thought the AI boom was just about chatbots and new gadgets, it’s time to think bigger.

Wall Street has quietly become the financial engine behind America’s AI expansion, pouring massive amounts of money into giant data centers, power-hungry chip farms, and next-gen computing campuses.

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And they’re doing it even as analysts warn of over-investment, slowing returns and echoes of past bubbles like in the early 2000s.

The financial fuel behind the AI boom isn’t just shaping Silicon Valley, it’s reshaping the broader economy. As Wall Street doubles down on debt-heavy data-center financing, the ripple effects could hit everything from household borrowing costs to electricity bills. And if this AI surge really is a bubble, Americans who’ve never bought tech stock could still find themselves in the blast zone if it bursts.

Wall Street wants in on the AI gold rush

A few years ago, Blue Owl Capital was lending to companies like Sara Lee Frozen Bakery. Today the same company is financing $10B to $30B AI data-center deals for Meta, Oracle and OpenAI (1). Blue Owl recently pulled together a $30 billion financing package for Meta’s Louisiana data-center, putting in $3 billion from its own clients, and borrowing the rest, securing a “debt-like guarantee” to cushion its equity if the project underperforms (2).

It’s part of a much bigger trend of private-credit giants, big banks and everyday asset managers piling into AI infrastructure because tech companies need enormous amounts of cash to build out computing power.

Analysts at Morgan Stanley estimate there will be nearly $3 trillion in spending on AI infrastructure by 2028, but only about half of that can be funded by the tech companies’ projected cash flow. In other words: someone has to lend the difference (3).

That financing gap has triggered concern that we may be entering a bubble, similar to the late-1990s telecom boom when companies laid down huge amounts of fibre, anticipating demand that never fully came (4).

Goldman Sachs CEO David Solomon has cautioned that, “Whenever you have an acceleration in technology and people get excited about it, you see significant capital formation by new companies trying to capitalize on that opportunity,” he said. “We’ve seen this before through history.” He added, “It won’t be a straight line.”

The opportunity set with AI is “enormous,” Solomon said, “There will be winners and losers, and it’s hard to pick them now.” A lot of the money being invested may not result in big returns, and some won’t produce any returns at all, he added (5).

But so far on Wall Street, the fear of missing out is outweighing fear of a bubble.

So who’s cutting the massive checks?

• Blue Owl Capital is emerging as a big lender in AI infrastructure.

• Meta, Oracle, and OpenAI are tapping billions of dollars in borrowed capital: for instance, Oracle is setting up a $38 billion debt deal to back its data-center build-out tied to OpenAI’s Stargate project (6).

• BlackRock and PIMCO are snapping up the bonds that fund these projects (7).

• Morgan Stanley played a big role in advisory for the Blue Owl deal (8).

Read More: Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself

Why it matters for everyone, not just investors

Though it can seem like trillion-dollar deals are far-removed from everyday Americans, these massive projects could ripple into your daily life. Here’s how:

Tighter credit markets: When trillions flow into AI, there’s less room, and higher rates, for mortgages, car loans and small-business credit.

Higher electricity bills: Massive AI data centers can put strain on local grids, pushing utilities to raise prices to fund new generation and transmission (10).

Lack of transparency with government budgets: Cities and states are offering tax breaks and infrastructure subsidies to attract these data facilities, but there isn’t always transparency, raising concerns about how public funds are being spent (11).

Construction bottlenecks: Skilled labor, concrete, steel and transformers are being swallowed by AI mega-projects, which could mean fewer resources for housing and commercial development (12).

How to brace for a potential AI bubble burst

Even if you’ve never bought an Nvidia stock or asked ChatGPT for a recipe, your electric bill, mortgage rate and local taxes could start to feel the impact of this massive AI boom. In the meantime, there are a few ways you can brace yourself if this bubble bursts:

• Keep consumer debt low. If credit tightens, interest rates could spike fast.

• Stay on top of your mortgage payments because refinancing could get more expensive.

• Watch your electricity footprint, since energy efficiency is going to be important.

• Keep an eye on your city’s incentive deals. If your town starts handing out tax breaks to data centers, pay attention to what taxpayers get back.

• Diversify your finances. Be cautious about letting your retirement ride entirely on the AI hype train.

Wall Street is betting bigger on AI than ever before, and regular folks could feel the fallout, even if they never touch ChatGPT. You can protect yourself by staying prepared and keeping an eye on your bills, rates and investments so that the AI gold rush doesn’t leave you and your wallet behind.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

WSJ (1, 2, 7); Morgan Stanley (3); IEEFA (4); Fortune (5, 9, 10); Bloomberg (6); Business Standard (8); Stateline (11); McKinsey (12)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.