Citadel Co-CIO Salame Warns AI Funding Boom Faces Unfinished Credit Market Test

Citadel co-chief investment officer Pablo Salame warned that the AI boom will not benefit all companies and that credit markets have yet to find effective ways to transfer risk, leaving an adjustment in financing incomplete. "The AI wave will sink some boats, and it's not a smooth wave," he said, adding the strain reflects a repricing of expectations between borrowers and lenders rather than a crisis. Risk premiums on non-investment-grade bonds have climbed sharply as technology companies borrow heavily to build AI infrastructure. Elon Musk warned Sunday that blocked debt-financing channels could push more than 200 AI cloud providers into failure or consolidation. Salame said equities, long less reliant on borrowing, now depend on capital spending for growth; any forced cutback would undercut assumed growth. Meta (META-US) has committed $825 billion in future spending and created a new share class for acquisitions and other outlays. The Wall Street Journal reported earlier this month that Anthropic may spend $750 billion on computing capacity over the next few years, with its upcoming IPO a test for the AI rally. Citadel founder Ken Griffin said last week an AI bubble is "almost certainly" forming. Salame argued creditors now hold more options, creating investment opportunities, and that pricing 30-year credit spreads is unrealistic given the difficulty of forecasting technology even three to five years out.