Home / Business and Economy / AI Boom: Professor Warns of Reckless Private Credit
AI Boom: Professor Warns of Reckless Private Credit
28 Jun
Summary
- Finance professor Aswath Damodaran criticizes private credit lenders.
- He warns the AI data center boom is becoming increasingly reckless.
- Damodaran likens private credit lenders to 'sheep' in a $20 trillion market.
NYU finance professor Aswath Damodaran, known as the "Dean of Valuation," has voiced strong criticism regarding private credit lenders financing the burgeoning artificial intelligence data-center industry. He argues that the sector's rapid expansion, fueled by immense capital inflow, is leading to increasingly reckless practices.
Damodaran expressed concern over lenders providing financing for massive AI infrastructure projects. He suggested that private credit has expanded beyond its original purpose of assisting borrowers overlooked by traditional banks, characterizing the lenders as "sheep" in a market that has ballooned to $20 trillion.
The valuation expert warned that this unchecked expansion is creating significant financial risks. He believes private credit is "setting itself up for a beating" and that its overreach could potentially bring down other entities, resulting in societal costs.
