Ed Zitron
Writes Where's Your Ed At, a newsletter on the AI industry's finances, and hosts the Better Offline podcast covering the same territory in audio.
“Don't watch the mouth, watch the hands. Watch what the banks are doing, not what they're saying. If JP Morgan says that SpaceX is the best thing ever, ignore it. Go and look at what JP Morgan is doing with data center debt.”
The Tech Report · October 2026
Zitron on banks that talk up AI stocks in public while selling off the AI data center debt they bought months earlier. He's borrowing a line from Spider-Man: Into the Spider-Verse, and his point is that the debt markets, not stock prices, show where the risk is.
Transcript
…I don't know. That worries me more than anything, but it's like, how worried do we be? We don't know. And that is actually deeply frustrating to me and scary. That's almost as scary as if it is as bad as we think. It's just like this big question mark for the biggest infrastructure thing ever.
…of the scale of the debt that they have is coming up against some sort of internal limits on industry exposure and things like that. But is that a reasonable assumption? And what's the ripple effect of buying and selling billions and billions of dollars of debt in such a small window of time?
So it is, like you said, it's very common for banks to take debt and then slice it up and sell it off to people. That's very common. Doing it so quickly, you would actually, in many cases, you would do it immediately. You would actually just, you would do a loan. The place to actually look is if they can't do that, if they are left sitting with it. That happened with Musk's Twitter deal when they couldn't sell the debt off. I think it also happened with the Paramount debt for buying Paramount with leathery Mr. Ellison and his big wet son David. I think that it's happening increasingly with data centers because they are trying to offload the risk, like you said, because they're over their risk limits. And actually, that is the biggest story here, which is how much they're selling off, interesting, could be big, isn't really clear. We don't really know how they're selling it, the reasons. What we do know is that every single bank has risk limits. There are limits to how much they can actually hold of any…
I just, one point of clarification, because we were talking about like they're selling it on because they're reaching sort of tolerance limits of this exposure. And then the people they sell it to will also have similar tolerance limits. I have no concept of what those limits are sort of in…
You're going to be horrified to hear it's probably the latter. Because so every time you hear an analyst jerking themselves from first principles about this stuff, they are doing so based on everything going perfectly. Especially if it's a big consensus holding. They are hearing, they hear all the…
Just finally, a Bank of America survey of global funding managers, which admittedly I did find through the Financial Times, they found that on average, the number one thing that these managers are worried about was not government debt. It was not private debt. It was hyperscalar capex on AI. And…
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