The AI boom is creating powerful momentum for tech M&A — but also stacking new risks across U.S. financial markets, warned executives from Lazard and Citadel at Reuters Momentum AI 2025 in New York.
Lazard MD Matthew Danzig said AI is now the “number one topic” for investors and CEOs, driving companies to pay steep premiums for AI tech and proprietary datasets they can’t build in-house.
“Every company that’s a potential target is figuring out their AI angle.”
Valuations are soaring as markets “pay for the future,” not fundamentals.
$7 trillion needed for AI infrastructure
McKinsey estimates the industry needs $7T by 2030 for data centers alone — yet investors are overlooking rising leverage and limited revenue to service that debt.
Nvidia, valued at $4.5T, posted record revenue and 65% YoY net income growth, but its stock fell 2.2% the next day as renewed bubble fears hit the tech sector.
Citadel: Market shocks are accelerating
Citadel CRO Joanna Welsh warned modern markets now amplify volatility:
“Spikes hit harder, fade faster, repeat more often.”
Credit risks are “starting to converge”
Welsh highlighted several stress points:
- Companies issuing 30–40 year IG bonds on assets with 4-year depreciation cycles, creating long-term cash-flow mismatches.
- A surge in zero-coupon convertible bonds, especially among lower-rated tech firms — a pattern seen before major downturns in 2001 and 2021.
- Rising exposure to illiquid private credit, compounding systemic risk.
Her warning:
“Stack that together, and some portfolios look ready for a brush fire.”
The AI boom is propelling innovation and M&A — but also building cross-market vulnerabilities that investors may be underestimating.