Russell Rhoads: Could the AI Data Center Spending Spree Backfire? | Baker & Cruz
Russell Rhoads, a financial management professor at Indiana University, discussed how heavy investment in AI data centers is supporting technology stocks and broader economic activity. He warned that companies are borrowing and issuing stock to fund the buildout, creating concerns about valuations and whether future revenue will justify the spending.
On WIBC's Baker & Cruz, host Brian Baker interviewed Russell Rhoads, a clinical associate professor of financial management at the Indiana University Kelley School of Business. Rhoads said AI data-center construction has become a major driver of economic activity and stock-market performance, while noting that political opposition and "not in my backyard" concerns are unlikely to significantly slow the buildout because of its perceived national-security importance and the willingness of some communities to host facilities.
Rhoads cautioned that many companies are borrowing money and issuing stock and debt to finance expansion, raising questions about overvaluation and the revenue needed to support the investments. He described the current model as borrowing heavily to build without a clear explanation of where future revenue will come from, and discussed Nvidia's pullback as part of broader concerns about the market's dependence on AI. The interview also covered jobs data, inflation and expectations for Federal Reserve interest-rate decisions.