Galaxy Digital CEO Says AI Credit Market Anxiety May Be Near Peak

Michael Novogratz, founder and CEO of Galaxy Digital, a crypto financial services and AI data center operator, said global credit market anxiety over AI spending may be nearing a turning point for relief.

Speaking on a conference call after the company reported third-quarter results on Oct. 27, Novogratz said the credit market is currently experiencing some "indigestion" and that market tension may have peaked. He added that while there is no easy path out of the situation, time could gradually improve conditions.

Recently, junk bond yields of AI cloud services provider CoreWeave spiked to levels typically signaling financial distress, raising broader concerns about how AI companies will sustain funding. CoreWeave is the main tenant of Galaxy's Helios facility in Texas. Novogratz pointed to Meta Platforms' equity fundraising and Anthropic's planned initial public offering as signs that pressure may be easing. Meta is seeking to raise $98 billion to fund AI spending, and Anthropic could become the first major U.S. company focused on AI software to list on public markets.

"Think of it this way: more equity funding, less credit funding," Novogratz said. "In some ways, the past week has been good for credit markets because we've seen such large-scale equity raises." He also cited the potential end of the Iran war as another reason for credit market stabilization, as it could push oil prices down and reduce pressure on the Federal Reserve to raise interest rates to curb inflation.