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Michael Kao: Debt financing could trigger AI bubble correction in 2026

Michael Kao: Debt financing could trigger AI bubble correction in 2026
Debt funding may threaten AI market

Michael Kao, CIO at Akadia Capital, expresses concern over the shift to debt financing in the AI sector as of 7/31/26.

He notes that while initial AI growth was supported by equity and free cash flow, the growing reliance on debt could serve as a 'debt governor' that pricks the current market bubble. Kao flags Oracle as an example relevant to this trend.

Kao has recently addressed other sectors beyond AI. On July 8, he discussed his perspective on Schrödinger’s oil price and quantum superposition. He also noted that the current WTI forward curve matches the April peak, with spot prices more than $20 lower.

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