Huo Xing Cai Jing reports that on June 7, DoubleLine Capital and Oaktree Capital are positioning themselves ahead of a potential burst in the AI bubble by carefully selecting bonds likely to survive a deep credit cycle. Robert Cohen, a portfolio manager at DoubleLine Capital, stated bluntly at the Bloomberg Global Credit Forum that “the probability of an AI bubble is about 100%,” arguing that as tech companies continue to pour massive capital into the sector, markets will inevitably reach bubble levels within months or years. Cohen defines a credit bubble as investors providing financing to companies that require actual growth to service their debt—a pattern historically associated with the collapse of tech booms. He advocates seeking out issuers capable of surviving through structural arrangements or strong balance sheets, rather than those reliant on future growth expectations. Debt levels in the AI industry have surged to unprecedented levels. According to Barclays, U.S. mega-cap tech companies have issued over $155 billion in global unsecured bonds this year alone—an increase of more than 45% compared to all of last year. Bloomberg Intelligence forecasts that corporate AI capital expenditures will reach approximately $5 trillion over the next five years, with a significant portion funded through debt. This week alone, Hut 8 issued around $4 billion in investment-grade bonds to finance NVIDIA-related data center projects, attracting four times oversubscription, while Anthropic’s $36 billion bond for chip procurement is nearing completion. Christina Lee, co-head of private credit at Oaktree Capital, noted that while opportunities in data center financing are vast, careful selection is essential: “It’s still unclear who will win and who will lose.” Dan Ivascyn, Chief Investment Officer at PIMCO, adopted an even more cautious stance, stating that AI is not suitable for overweighting—but given the enormous financing demand, value can still be unlocked while maintaining a defensive posture. He warned that potential losses from defaults could exceed historical norms. Ray Dalio of Bridgewater Associates cautioned that major technological revolutions are always accompanied by excessive speculation, leaving companies trapped in a dilemma: “Either invest heavily to seize market share, or underinvest and cede it to competitors.”
Major Bond Firms Anticipate AI Bubble with Credit Strategies
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Summary
On-chain data reveals that major bond firms such as DoubleLine and Oaktree are hedging against a potential AI bubble by favoring credit bonds issued by companies with strong balance sheets. DoubleLine’s Robert Cohen notes that tech firms are driving the market toward speculative levels, with U.S. hyperscale companies issuing over $155 billion in unsecured bonds this year. Anthropic is nearing a $36 billion chip financing deal, while Hut 8’s $4 billion investment-grade bonds for NVIDIA data centers were four times oversubscribed. PIMCO’s Dan Ivascyn and Bridgewater’s Ray Dalio warn of the risks associated with overinvestment in AI, even as altcoins to watch remain largely overlooked in this debt-driven cycle.
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