U.S., China and the race for cheaper AI

AI Investment & Strategy - US cloud giants are projected to spend nearly $700 billion on data centers by 2027, while China's major players are expected to spend just under $80 billion [4] - This represents a 10 to 1 gap in capital spending between US and Chinese AI development [4] - Chinese AI models are performing at roughly the same level as American top models despite the massive difference in investment [4] Market Trends & Financial Implications - The AI trade is experiencing a resurgence despite debt-fueled bubble concerns, exemplified by banks reportedly lending Oracle $18 billion for a new data center [1] - American AI development is being financed through private credit and bond markets, contrasting with a focus on efficiency in China [2][3] - The contrast in capital expenditure and financing models could make investors skittish and question the valuations of trillion-dollar promises from US giants [5][6] Company Focus - Oracle's $18 billion debt deal underscores the emerging narrative of AI development being built on borrowed money [1][2] - China's internet giants are about to report earnings, and their capex outlook could highlight the investment gap [5]