IBM’s CEO says trillions spent on AI data centers can’t pay off at today’s costs. The Bank of England warns AI is creating new financial risks in lending.

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Arvind Krishna, CEO of IBM, has argued that the recent surge in spending by Big Tech on AI-data centers is economically unrealistic. On the “Decoder” podcast he estimated that building and fully outfitting a one-gigawatt AI data center costs about $80 billion. Given that industry announcements suggest firms are planning up to 100 gigawatts of compute capacity, the total capital expenditure could reach around $8 trillion, which would require roughly $800 billion in profits just to cover interest.

Krishna also highlighted that AI hardware like GPUs depreciates quickly and often needs to be replaced roughly every five years, which further undermines long-term financial returns. He said he believes the likelihood of achieving true artificial general intelligence (AGI) with current technology is between zero and one percent, making the massive infrastructure bets more speculative than certain.

Still, Krishna acknowledged the potential of today’s AI tools to deliver significant enterprise productivity gains. He cautioned that while infrastructure-heavy “AGI-race” spending may not pay off, more modest, business-focused AI deployments could still be worthwhile.

https://www.businessinsider.com/ibm-ceo-big-tech-ai-capex-data-center-spending-2025-12

“The Bank of England said on Tuesday that threats to Britain’s financial system had risen this year due to stretched valuations of companies investing in artificial intelligence, risky lending and bets with borrowed money in government bond markets.
The comments in its half-yearly Financial Stability Report, opens new tab build on warnings made in recent months by BoE Governor Andrew Bailey and other policymakers, although it also accompanied the first reduction in capital requirements for British banks since the 2008 global financial crisis.”

https://www.reuters.com/sustainability/boards-policy-regulation/bank-england-sees-risks-ai-private-credit-gilt-repo-half-yearly-update-2025-12-02/