AI Shortage of Money Reshapes Industry Narrative; Market No Longer Believes Burning Cash Wins

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STAR Market Daily Zheng Yuanfang Editor Ji Sheng 2026-10-24 08:47

① Competition for industrial capital is becoming increasingly intense. Meta states outright in the document that peers have already begun large-scale financing, so even though the company currently has sufficient funds, it must raise funds ahead of competitors. ② The financing time window and the ability to obtain funds determine who can continue to survive at the table. ③ Among the beleaguered "Magnificent Seven" US stocks, Apple instead stands out alone, hitting a record high.

STAR Market Daily, October 24 — AI investment is continuously siphoning liquidity from the market, and industry giants are still accelerating this process.

Jensen Huang had just announced at the GTC Berlin conference that he would join with a group of supply chain partners to launch a major industrial chain expansion, covering CPO, substrates, advanced packaging and other segments, and provide KYEC with $1.1 billion in capacity reservation prepayments. Shortly afterward, SpaceX released its Q3 financial report, with superintelligence business quarterly revenue of about $7.6 billion, corresponding to capital expenditure of as much as $16.4 billion; Meta on the same day raised its full-year capital expenditure plan to $135 billion to $145 billion, and also newly established non-voting Class C stock to pave the way for future large-scale financing.

In the Class C stock-related document, Meta clearly stated that "timing is critical," directly naming Alphabet, SpaceX, Anthropic and OpenAI and saying that other well-known companies have recently begun large-scale financing, and more companies are expected to follow. Therefore, although Meta currently has sufficient capital resources to meet current needs, for future financing needs it must raise funds before more companies absorb the available capital in the market.

▌Financing race

But "AI is short of money" here does not mean the entire AI industry's funding pool has dried up. At least judging from cash flow estimates of large listed tech companies, the AI investment cycle has not yet reached the point where there is no money to invest — according to a JPMorgan report, global listed tech companies are expected to generate about $2.2 trillion in operating cash flow this year, with capital expenditure and R&D spending totaling about $1.8 trillion, leaving about $400 billion in surplus after offsetting the two. Even if the tech sector raises capital expenditure by 25% per year and cash flow grows by 20% per year from 2026-2030, it will still maintain a small surplus by 2030. This means that within a considerable time window, the tech sector as a whole does not need to rely on external capital market funding to support AI infrastructure investment.

But the problem is that a surplus in total funds does not mean every company has money. JPMorgan data shows that Neocloud companies account for a relatively small share of the industry, contributing about $30 billion in operating cash flow, corresponding to about $80 billion in capital expenditure and R&D spending; compared with tech giants with mature businesses and strong balance sheets, such companies are more dependent on external financing. When financing costs rise, funding pressure may quickly transmit to expansion plans.

Coreweave, backed by Nvidia, is a Neocloud company. Bank of America analyst Tal Liani estimates that CoreWeave needs to raise as much as $20 billion to fulfill customer orders. "No one worries that Meta, Amazon or Google can't borrow money, but if financing thresholds shut small and medium-sized enterprises out, the market doesn't even need a substantive blow-up to fall into panic."

On Thursday local time, Jensen Huang still gave a relatively optimistic statement, saying that market demand for Neocloud computing power is extremely strong, but working capital has become a huge bottleneck. "Because demand in all areas of AI is very strong, capital has become scarce. The scale of funding the AI industry needs far exceeds the financing scale companies can currently obtain, and this problem will eventually be resolved."

As giants successively step up fundraising, funds can no longer flow to every construction project at a sufficiently low cost, and financing costs and financing thresholds rise accordingly. At such times, AI investment is no longer just a competition of technology and efficiency, but also a contest of financial strength and financing capability.

It is worth noting that S&P recently also warned that tech giants' AI liabilities may be higher than known levels. Tech giants may support data centers or small AI companies through related-party financing structures (for example, Nvidia and Coreweave), and some related liabilities may not be fully presented in tech giants' public information. "It is reasonable to speculate that there are more (debts) in the market that we have not yet noticed," said Mark Habib, global head of digital infrastructure at S&P Global.

▌Doubts trigger broad selloff; among the Magnificent Seven, only Apple stands out alone

Once doubt takes root, even strong results and endorsements from big names may not be enough to reverse market expectations.

Meta's third-quarter revenue and profit both beat market expectations, but the again-raised capital expenditure guidance and the first negative cash flow sent investors into a frenzy of anxiety; the stock then fell nearly 7% in a single day, wiping about $124 billion off its market value in one day.

SpaceX's third-quarter revenue surged 161%, achieving a profit for the first time, with AI business revenue surpassing Starlink for the first time; on the day the financial report was released, it drove an additional gain of nearly 8%, but the next day, amid market concerns about AI spending, the stock fell more than 9%.

Jensen Huang's "Midas touch" also tends to lose effectiveness after repeated high-profile appearances. Several companies Nvidia named at the GTC Berlin conference as co-expanding production either fell sharply after one day of gains or continued their declines.

However, it is worth noting that among the beleaguered "Magnificent Seven" US stocks, Apple instead stood out alone, not only rising 1.23% on Thursday local time but also hitting a record high.

After all, the other "six sisters" bear model R&D/infrastructure costs themselves, while Apple has chosen a more restrained asset-light path: its capital expenditure is only a fraction of other giants', and it uses external models, integrating them into its own product and service ecosystem. This path previously exposed Apple to ridicule for "falling behind in AI," but it also allowed Apple to be rewarded by the market amid such turbulence.

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Cailianshe statement: The article content is for reference only and does not constitute investment advice. Investors who act on it do so at their own risk.

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