BlackRock CEO Larry Fink says that putting a stop to America’s data center buildout would push the economy into recession.
Seoul’s Kospi dropped more than 8% as AI-linked chipmakers sold off their shares and investors questioned whether the spending on AI matches the fundamentals.
What would push the U.S. economy into a recession?
Larry Fink, the BlackRock chief executive, stated during a CNBC interview on Wednesday that if the U.S. were to pause the building of data centers, the country would fall into a recession.
Fink’s opinion is that the increase in capital spending is what keeps the economy growing, and data centers are “not the problem” but a source of jobs at a time when the U.S. is short of electricians, plumbers and welders.
Fink pointed out that the government is already heavily indebted, with national debt climbing from $8 trillion in 2000 to $40 trillion today. He argued that growth, therefore, has to come from private investment so the GDP can keep growing at close to 3% a year.
BlackRock (NYSE: BLK) is working on a way to finance all that spending by collecting data on how long AI chips remain useful and how much value they keep over time. The firm will then create credit ratings based on what the chips are still worth and, eventually, bundle the hardware into securities that investors can buy.
Fink said he has talked to every chip maker in the past two weeks, including Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO). He also pointed to Google’s (NASDAQ: GOOGL) tensor processing units as a sign that more companies are making AI hardware. The project could take about a year.
Fink’s comments come after BlackRock’s (BLK) third-quarter earnings of $15.93 a share beat the predicted $14.15. Revenue rose by 19% to $7.75 billion, and assets under management hit a record $15.5 trillion.
Will banks continue funding the building of AI infrastructure?
Michael Roberts, the head of corporate and institutional banking at HSBC Holdings (NYSE: HSBC), said that money is now hard to come by for AI infrastructure projects because lenders and investors are growing more cautious and demanding higher payoffs before they’ll back them.
However, just two days earlier, HSBC’s head of emerging market and global equity strategy, Alastair Pinder, told clients to stay invested in the AI trade. He stated that the bank was optimistic about the sector due to an increase in earnings and lower valuations.
Mirae Asset Securities analyst Seo Sang-young has also said that the market is now sensitive to “whether massive infrastructure investment will lead to real income,” rather than AI revenue growth on its own.
The cautious camp was handed its evidence when the KOSPI closed down 7.57% at 5,554.22, after falling more than 9% intraday to 5,450.81. A circuit breaker halted the market for 20 minutes near midday, the first such stop since late July. Reuters put the mid-session loss at 8%.
The drop was due to Samsung Electronics declining by about 9.5%. SK Hynix was down 11.06%, while the Kosdaq fell 7.65%. Foreign investors sold 3.62 trillion won, or $2.68 billion, of shares.
U.S. inflation set off the decline. September consumer prices rose 0.6% from August, the fastest monthly jump since April, stoking bets on further Federal Reserve rate increases and dragging down AI-linked stocks. The Philadelphia Semiconductor Index had slid 4.3% overnight.
Notably, PwC estimates AI-related investment in Asia alone could reach $8.2 trillion by 2050. S&P Global counted $225 billion in bonds from hyperscalers and related firms in 2026, a 973.7% jump.
A Nikkei study estimates that “hidden” off-balance-sheet obligations related to data center construction add up to $1.65 trillion; meanwhile, the companies doing the spending are still not profitable.
Cryptopolitan reported that Anthropic told investors its third-quarter revenue hit $16.8 billion, up 45% from the previous quarter, but it still lost more than $8 billion from operations. Broadcom CEO Hock Tan recently said many AI investors are like casino gamblers who don’t understand what they’re buying.
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