Apollo CEO says some AI fortunes may be lost

Core Insights - The AI arms race presents both opportunities and risks, with potential for significant financial gains and losses [1] - Demand for data is currently strong, providing a safety buffer for credit investors, particularly through non-negotiable leases with major tech companies [2] - Investment in data center companies can be speculative due to their lack of diversified business models compared to hyperscalers [4] Group 1: Investment Landscape - Credit investors are focused on securing repayment before lease renewals, as the demand for data is expected to remain robust in the coming years [2] - The leases with major tech firms typically last between 10 to 15 years, creating a stable cash flow for credit investors [2] - Equity investors face uncertainty as the future economics of data centers can be influenced by various factors, including technology advancements and energy consumption [3] Group 2: Risks and Concerns - The potential for tech giants not to renew leases could leave data center owners without clients, impacting their returns on equity [3] - Investment in data centers is seen as speculative, as ownership does not guarantee profitability despite the value of data [4] - The real risk lies with highly leveraged companies that support hyperscalers, which are dependent on contracts and financing from tech giants [6] Group 3: Hyperscalers' Stability - Concerns have been raised about hyperscalers like Amazon, Microsoft, and Google using debt for AI infrastructure, but they are viewed as stable due to their strong cash flows [5]