Wells Fargo’s Charles Scharf says a tsunami of capital is forming to support the AI infrastructure buildout, but questions remain about how it will generate returns.
In a Fox News interview, the head of Wells Fargo says lenders are already navigating growing exposure to AI-related lending.
Despite concerns about the private credit market, Scharf says banks and other lenders are positioning to capture the potential upside of the AI boom.
“And when we think about just the amount of credit that’s being extended in the data center space, I’m sure we’ll talk about the worries that exist within private credit, those are very real. But at the same time, they’re real underlying businesses with real value propositions. And like anything else in life, they’re going to be winners and losers. And we’re all doing our best to make sure that we’re financing and partnering with those that are going to be the winners.”
Scharf also highlights that the scale of the money that has to be borrowed could reach into the trillions, even if the path to profitability remains unclear.
But according to the Wells Fargo chief executive, one group stands out as a potential winner in the AI revolution.
“The lending? It’s going to be trillions of dollars, whether it’s three to five trillion dollars, that’s going to be needed to build out the infrastructure.
Again, what we understand is that there are huge benefits for AI. I mean, huge risks and huge benefits. And the question is, what’s the business model going to look like to support all that spending? And again, not everyone is going to get it right.
The hyperscalers have a huge advantage. Those who control these large language models that continue to be on the forefront, continue to invest, people are going to pay for that. And what’s strange at this point is there’s not this clear understanding of what that business model looks like. But there’s no question that the benefits are there.”
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