AI Capital Expenditure Triggers Trust Crisis, Funds Flow to US Treasuries

On October 24, as the capital expenditure of AI giants continues to swell, the market questions the return on related investments, putting pressure on the US tech sector and accelerating the flow of funds to US Treasuries. The Nasdaq 100 index recorded its worst two-week performance since April 2025, with AI-related stocks dropping 4.9% this week, and Meta's stock price falling over 9% in a single week. In the bond market, the yield on the 10-year US Treasury rose to 5.14% at the beginning of the week before retreating, closing at 4.97% on Thursday, marking the first time in a month it has fallen below 5%. This month, bond ETFs saw an inflow of approximately $58 billion, accounting for 38% of total ETF inflows. The market is concerned that AI companies and governments are simultaneously expanding their financing needs, competing for limited capital resources. Anthropic's commitment to computing power spending over the next few years could reach as high as $750 billion, while Meta plans to invest heavily in computing power and AI infrastructure. The US government continues to issue debt, exacerbating the supply-demand pressure on capital. The credit market is also under pressure, with the credit risk indicator for US investment-grade corporate bonds rising to its highest level since March, and the yield on CCC-rated bonds climbing to 15.85%, the highest level since 2020. Analysts believe that the long-term development prospects of AI and short-term investment returns are not the same, and as capital costs rise, companies with weaker financing capabilities may face pressure first, prompting the market to reassess the risks of overvalued assets.

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