Ares Management sizes AI spending near $5 trillion and lends on the buildings, not the $3 trillion of chips
Ares CEO Michael Arougheti says he cannot underwrite the depreciation curve on GPUs, so the $690.6 billion manager is financing AI's data centers and power instead. The chip side of the debt boom, from Broadcom's $60 billion package to CoreWeave's $51 billion stack, is being priced for exactly that risk.
Vincent Jiang · 3 min read
On its October 29 earnings call, Ares Management+3.64% — Ares Management, up 3.64 percent today chief executive Michael Arougheti drew a line through the middle of the AI build 1. The firm, which manages $690.6 billion, will finance the data centers and the power behind them, not the chips inside 1. "It's frankly a simpler underwriting with really attractive relative value," he said 1.
The half Ares refuses is the bigger half
Arougheti sizes AI capital spending demand near $5 trillion: about $2 trillion for buildings and adjacent infrastructure, about $3 trillion for the GPUs themselves 1. Chips cost multiples of the buildings that house them and depreciate over five to six years, and he said he does not know "how to underwrite the decline and depreciation curves on that type of technology"; a person close to the firm says Ares fears being left holding obsolete assets 18. For now, he said, Ares sticks to "the half of the market that we understand best" 1.
Banks and Blackstone take the chip risk
The stance is not capital rationing. Ares raised more than $31 billion of gross commitments in the quarter, over half of it outside credit, invested $35 billion, and lifted fee-related earnings 11% to $524.2 million as assets grew 16% year over year 293.
Someone else is writing the chip risk: banks are preparing a $42 billion senior tranche, with Blackstone+2.45% — Blackstone, up 2.45 percent today leading $18 billion of junior debt, inside Broadcom's roughly $60 billion package for chips leased to Anthropic 4.
SpaceX+4.65% — SpaceX, up 4.65 percent today, listed since June, is in talks to borrow about $40 billion for Nvidia chips in a deal led by Apollo 5. Morgan Stanley+2.01% — Morgan Stanley, up 2.01 percent today counts $466 billion of AI-linked debt raised in 2026 so far, against $101 billion in the same period of 2025 7.
Chip-backed debt stacks up in three balance sheets
- Estimate
Data
| Value | |
|---|---|
| Broadcom package for Anthropic | $60B |
| CoreWeave debt and obligations | $51B |
| SpaceX Nvidia chip raise (in talks) (estimate) | $40B |
CoreWeave is the price tag
CoreWeave−2.21% — CoreWeave, down 2.21 percent today, the best known of the neoclouds renting GPUs to AI developers, carries more than $51 billion of debt and obligations 6. Its 9.75% bond due 2031 yields about 15.8%, and its five-year credit default swaps traded near 1,038 basis points, past the 1,000 level S&P Global's+1.81% — S&P Global, up 1.81 percent today Gavan Nolan describes as generally indicating distress; protecting $10 million of that debt costs $1.82 million upfront 67.
CoreWeave's debt has grown almost fivefold in six quarters
- Total debt
- Revenue
Data
| Total debt | Revenue | |
|---|---|---|
| Q4 '24 | $10.62B | $0.75B |
| Q1 '25 | $11.9B | $0.98B |
| Q2 '25 | $14.56B | $1.21B |
| Q3 '25 | $18.81B | $1.37B |
| Q4 '25 | $29.82B | $1.57B |
| Q1 '26 | $35.15B | $2.08B |
| Q2 '26 | $51.61B | $2.58B |
The worry is spreading up the credit ladder: Oracle's insurance cost has more than doubled this year, to 322 basis points 7.
Where GPUs are the collateral, default insurance costs 10 times more
Data
| Value | |
|---|---|
| CoreWeave | 1,090bp |
| Oracle | 322bp |
| SpaceX | 226bp |
| Meta | 108bp |
| Nvidia | 101bp |
The other side, and who ends up holding it
CoreWeave chief executive Mike Intrator wrote that the market "misunderstands and acts irrationally," citing a backlog above $100 billion, about two-thirds of it with investment-grade customers including Microsoft+1.14% — Microsoft, up 1.14 percent today and Meta+0.62% — Meta, up 0.62 percent today; Deutsche Bank calls the selloff a buying opportunity 6. Arougheti hedged too, casting no aspersions on GPU financing and ruling it out only "for the time being" 1.
Either way the money moves: data-center and power developers gain a patient $690 billion lender, GPU clouds face a thinner, costlier pool, and the chip risk migrates to bank syndicates and the fund investors behind them.
Syndications and IPOs will price the chip half
Watch the placements: whether Broadcom's+1.72% — Broadcom, up 1.72 percent today $42 billion senior tranche syndicates smoothly, where Anthropic's$350B — Anthropic, private, latest valuation $350B IPO prices after its prospectus filing, and what CoreWeave pays at its next borrowing 2. Ares reports in February, expecting a record fundraising year 2. The tell is the gap in financing cost between the two halves of its $5 trillion math 2.
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