--- title: "\"Politics and Economics - Shi Jingquan\" AI Debt Break?" type: "News" locale: "en" url: "https://longbridge.com/en/news/294619575.md" description: "The article points out that the essence of the AI bubble is a debt crisis, expressing concerns that U.S. tech stocks may face a risk of funding shortages due to a significant increase in capital expenditures. Taking the severe fluctuations in the South Korean stock market as an example, the KOSPI index's sharp decline triggered large-scale margin calls and social panic, prompting the government to strengthen measures against extreme events. The author warns that a collapse in the South Korean stock market could be replayed in U.S. AI stocks, as the current U.S. stock market is accumulating similar \"gunpowder,\" necessitating vigilance against potential systemic risks" datetime: "2026-08-03T00:10:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294619575.md) - [en](https://longbridge.com/en/news/294619575.md) - [zh-HK](https://longbridge.com/zh-HK/news/294619575.md) --- # "Politics and Economics - Shi Jingquan" AI Debt Break? "Political and Economic Affairs" Many investors are worried about the AI bubble, but what is the AI bubble? In simple terms: not enough money to pay off debts. What debts? There are three types of debts in a society: 1. National debt, 2. Corporate debt, 3. Personal debt. National debt belongs to everyone; if the government is irresponsible, it can use various methods to default on its debts. One common method is printing money, which leads to currency devaluation, akin to drinking poison to quench thirst, ultimately leading to decline. Personal debt is individual; the way to handle it is to sell or pawn. When there is nothing left to sell, nothing left to pawn, and no more borrowing options, the only recourse is to declare bankruptcy or go to jail. For investors, the first two types of debt may not directly affect them, but the biggest fear is when the company whose stock they hold is heavily indebted and unable to repay, meaning cash flow is insufficient, leading to lawsuits and bankruptcy, rendering the stock worthless. This bankruptcy crisis is brewing on a large scale in today's AI/technology market; will you be caught in it? Let's see below. Yahoo News reports: Recently, the South Korean stock market has experienced severe fluctuations, with the KOSPI index plunging 28.9% as of July 30, surpassing the 27% drop during the 1997 Asian financial crisis and exceeding the 23% record during the 2008 global financial crisis. The market crash has triggered a collapse of investor confidence. According to South Korean media, about 1.2 million investors across South Korea are facing margin calls, with approximately 350,000 at risk of forced liquidation, causing panic in the investment community. The stock market crash has also spread to the social level, with numerous lamentations appearing on major online forums in South Korea. Some investors describe how once chatty colleagues have suddenly become silent, and some have even begun asking banks if they can mortgage their homes. Due to concerns that investment failures could lead to extreme events, South Korean police have raised their alert level. The South Korean government has ordered increased patrols of 27 major bridges over the Han River in Seoul, particularly focusing on the Yeouido area where securities firms are concentrated. Police and fire units have increased rescue personnel and initiated patrols on the Han River, SOS emergency reporting devices, as well as protective measures such as AI smart patrol robots and drones, hoping to reduce the social risks that may arise from the stock market crash. The collapse of the South Korean stock market could also be replayed in the U.S. AI stocks, as "gunpowder" is accumulating, with just a spark needed to ignite it. - U.S. tech companies are starting to run out of money to support increased capital expenditures \* The "gunpowder" refers to the current AI circle in the U.S., which is performing a "moonwalk" thinking it can elevate stock prices by stepping on its own feet. NVIDIA (US.NVDA) invested $100 billion in OpenAI, which then reinvested this $100 billion into Oracle (US.ORCL), and Oracle in turn reinvested this $100 billion back into NVIDIA. This kind of mutual investment can be mutually beneficial, so what is there to fear? Michael Cembalest of JP Morgan pointed out what there is to fear. To avoid any misunderstanding, here are Cembalest's exact words: Oracle's stock jumped by 25% after being promised $60 billion a year from OpenAI, an amount of money OpenAI doesn't earn yet to provide cloud computing facilities that Oracle hasn't built yet and which will require 4.5 GW of power (the equivalent of 2.25 Hoover Dams or four nuclear plants) as well as increased borrowing by Oracle, whose debt to equity ratio is already 500% compared to 50% for Amazon, 30% for Microsoft, and even less at Meta and Google. The deal between Nvidia and OpenAI has caused a ripple effect, leading to a series of funding activities in the U.S. tech industry, including hardware, software, investment, services, and angel funds. Major tech companies are scrambling to secure market share, fearing they might be pushed to the edge of the industry, and are expressing intentions to increase investments in new technologies, data centers, etc. By 2028, the capital expenditure of major tech players is expected to reach $1 trillion. Please note that the total U.S. national debt has surpassed $40 trillion, and while the U.S. government is struggling to repay old debts/interests, the commercial market needs an additional $1 trillion in funding. Where will the money come from? General investors lack the information and ability to calculate where the money will come from, but JP Morgan has estimated: \\\* Tech companies will issue unsecured corporate bonds worth $200 billion; \\\* They will issue bonds secured by data centers and other assets worth $150 billion; \\\* Private market mortgage loans will amount to $800 billion; \\\* Bank loans will total $350 billion. JP Morgan's conclusion is that the private market will have to bear this funding gap. Private capital markets will have to step up, and tech companies themselves will also need to contribute, with these "contributions" being the internal liquidity of tech companies, which is expected to be significantly reduced. The market is aware of the pressure from this funding gap in tech stocks, which is why since January of this year, the performance of tech stocks has lagged behind other indices. This is because: Investors are no longer willing to accept growth at any cost; they want to see tangible returns on their investments. To put it bluntly: I haven't read books, I don't know much, don't fool me, Don't Talk, Show Me the Profit. No Profit? Sell you The above predicament of US tech stocks is still the most optimistic scenario, as it has not yet accounted for the Chinese tech companies that can offer rock-bottom prices. What makes US tech companies feel threatened by China is: - DeepSeek is open source and free, - Kimi is priced at 1/72 of Anthropic, - What about the price of Yushu Robotics...? These Chinese companies and other potential future Chinese tech firms can undercut prices again and again, smashing the revenue forecasts of US tech companies. This means that if you estimate an investment of $1,000 could bring a return of $1,500, but with China's rock-bottom prices, you might only recover $900. Simply put, it was a miscalculation, failing to account for the rapid development of Chinese technology, which has taken away the meat, bones, and broth. When the trillion-dollar investments in US technology face the ambush of rock-bottom prices from Chinese tech companies, will major US tech firms regret not incorporating these low prices into their models? In fact, as early as the 1980s, Bill Gates made this prediction, to be continued tomorrow (the 4th). — Senior Investor Shi Jingquan (Investment involves risks, and each investor has a different risk tolerance; independent thinking is essential. The author will buy and sell according to market conditions.) - The articles published in Economic Digest, whether signed or unsigned, reflect the personal opinions of the authors and do not represent the position of Economic Digest. Economic Digest serves as a platform for free speech ### Related Stocks - [EWY.US](https://longbridge.com/en/quote/EWY.US.md) - [03121.HK](https://longbridge.com/en/quote/03121.HK.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [OpenAI.NA](https://longbridge.com/en/quote/OpenAI.NA.md) - [ORCL.US](https://longbridge.com/en/quote/ORCL.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) - [ORCL-D.US](https://longbridge.com/en/quote/ORCL-D.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) ## Related News & Research - [Doosan : Strong YoY and QoQ growth in sales, profit, and orders across all major business segments](https://longbridge.com/en/news/293896801.md) - [Hyundai Shows Neira Electric MPV Prototype in Indonesia Motor Show](https://longbridge.com/en/news/294585312.md) - [SK hynix: Record-breaking profit and revenue fueled by AI demand and high-value memory product sales](https://longbridge.com/en/news/294124859.md) - [HD Hyundai: Q2 2026 delivered record profits and margins amid oil price gains and geopolitical volatility](https://longbridge.com/en/news/294478815.md) - [Jim Cramer Calls Tight US-Korea Market Link an ‘Under-Rated Reason’ for Tech Stock Slump as KOSPI Tumbles 28% in a Month](https://longbridge.com/en/news/294053701.md)