Axios

The boom in spending on AI infrastructure and services is sustainable because it's driving meaningful innovation, the CFO of Amazon Web Services tells Axios.

Why it matters: Some investors and analysts are getting nervous about an AI bubble, with an eye on ballooning debt, corporate valuations and circular financing deals and whether revenue growth can keep pace with massive infrastructure spending.

On October 27 at 9:00am ET, tune in to conversations with Philadelphia mayor Cherelle Parker, Chamber of Commerce for Greater Philadelphia president and CEO Chellie Cameron and JEVS Human Services president and CEO Cynthia F. Figueroa on the workforce challenges, skills and investments shaping Philadelphia's economic future.

The program will also include a sponsored View from the Top segment featuring JPMorganChase's head of Chase Consumer Banking, Jennifer Roberts.

Goldman Sachs CEO David Solomon will be the next chair of the Business Council, an invitation-only group of some of the world's most powerful corporate executives, according to an announcement shared exclusively with Axios.

Why it matters: The appointment puts Solomon at the helm of an influential forum where top CEOs exchange views on the biggest issues facing corporate America.

The adults have entered the AI chat — bond investors this week looked up from their massive buying binge and asked themselves, "Hey, are we sure these investments are going to pay out?"

Why it matters: The AI boom is looking a little wobbly these days, at least when it comes to all the borrowed money that's fueling it.

CoreWeave's huge debts, giant spending plans and myriad financial ties to giants like Microsoft, Nvidia and OpenAI make it an ideal test of whether the AI boom can stand up to serious market scrutiny.

Why it matters: If the recent sharp sell-off in CoreWeave's bonds means bond investors are less interested in funding the data center build-out, it could mark a major change for the AI boom that has been powering the U.S. economy and stock market.

Tesla is expected to unveil its Roadster Thursday night, potentially featuring SpaceX-designed thrusters that could literally lift the car off the ground.

• A much bigger Tesla-SpaceX tie-up — the long-speculated merger of Elon Musk's two companies — could come as soon as this fall, say analysts at the Barclays investment bank.

The big picture: Musk's business empire is becoming increasingly interconnected, raising the prospect of a combination that would consolidate his control over two of the world's most valuable companies, while allowing both to move faster on big AI projects.

A grocery chain says it now costs more to ship a head of lettuce from California than to buy the lettuce itself. Tech companies are trying to purchase entire inventories of electrical equipment to build data centers.

Why it matters: These anecdotes from the Fed's latest Beige Book show how two extraordinary forces — the AI buildout and the Iran war — are changing decisions about spending, investment and hiring.

• The implications extend beyond individual firms, with consequences for inflation and employment, as the Fed weighs another rate hike.

Zoom in: A grocery chain told the Richmond Fed that diesel prices have risen 30% from a year earlier — making shipping lettuce more expensive than the cost of the vegetable — but price-sensitive customers have left it unable to pass along the higher costs.

• The energy shock is also squeezing businesses locked into earlier contracts: A Montana timber company said fuel costs had more than doubled on a project negotiated months earlier.

The AI boom is creating another strain, intensifying competition for equipment needed to build data centers.

• An electrical equipment distributor told the Chicago Fed that tech companies tried to buy up all of its available equipment. Suppliers resisted, citing commitments to other customers.

What to watch: AI is changing how many workers businesses believe they need and what they need them to do in ways not yet apparent in broader labor market data.

• In Dallas, an accounting industry contact said some large firms were delaying employment contracts because AI productivity gains could reduce their need for entry-level workers.
• A staffing firm in the area said AI agents conducted more than 180 hours of job interviews in two days, leaving human recruiters to review the results and make hiring decisions.

Pro rata rights have long been a standard feature of venture capital deals, but a new startup dispute has sparked debate over whether that should change.

• On one side are fiduciaries. On the other are founders and the founder-friendly.

Bending Spoons on Wednesday secured a $330 million investment from existing shareholder Berkshire Hathaway.

Why it matters: The Italian software conglomerate, known for buying legacy brands like AOL and Vimeo, now has more dry powder for M&A.

CoreWeave was at the heart of the market's volatility Wednesday.

Why it matters: The heavily indebted, cash-burning neocloud — a data center operator that effectively rents out its AI computing capacity — is seen as something of a canary in the coal mine for the broader AI trade.

• The sharp sell-offs in its bonds and stocks underscored how jittery investors are getting about the AI investment binge.