Unlike some politicians, I know how to read financial statements. In fact, I spent an entire career reviewing financial statements for investment risks, from the viewpoint of a reasonable investor. Last weekend, I reviewed a major AI player’s financial statements for its AI segment, showing it lost $6.4 billion dollars in that segment in 2025 alone.
The major losses AI companies like these are experiencing stem from their huge data center construction costs, with no significant “return on investment.” In other words, there’s been no profitability up to this point. Most AI companies are financing these data centers with enormous amounts of debt. To fund the debt, many companies are entering into data or compute contracts with related companies—companies they hold significant interest in. Closed loop valuations and circular financing arrangements allow the bubble to continue to grow.
Thus, a growing concern is in this so-called “AI race” to build so many data centers. Will there be a nationwide or global financial crash in the aftermath? In such a scenario, only a couple major players may be left standing.
With growing Wall Street financial concerns of an AI bubble along the lines of the “dot com” bust, or the WorldCom “off-balance sheet” disaster, or the housing market bubble of 2008, policymakers better wake up. But you don’t have to take my word for it. The Bank for International Settlements just issued a 56-page analysis based on concerns of related party transactions, closed loop valuations and circular financing. You can read a summary and the full report, “The AI Investment Race,” here.
According to the BIS abstract, “The AI build-out ranks among the largest technology-driven investment booms in U.S. history. Its scale, reliance on debt and circular equity ties, raise questions about the boom’s sustainability and financial stability. We study a dynamic contest in which firms competing for a few dominant positions over-commit resources.
“The over-investment leaves the sector exposed to revenue disappointment that could turn boom into bust. The larger the boom, the deeper the eventual bust. The race to commit early through debt and circular financing also makes a bust more likely. Calibrated to balance sheet and deal data, the model points to over-investment of around 1.5 times the efficient level, rising to around three times where demand is less elastic. A network analysis shows that stress in one firm could cascade to others through chains of financial exposures.”
From a July 15, 2026, Tech Times article summarizing the BIS report: “BIS has now placed the sustainability of AI investment on the same risk register as persistent inflation, deteriorating fiscal conditions, and global financial fragility. That is a formal systemic designation from the institution that coordinates the world’s central banks—not a Wall Street opinion. Whether AI revenues arrive before the structural vulnerabilities of AI financing are tested is the defining economic question of the next three years.”
I hope I am wrong, but the growing financial evidence and analysis seems to point to an “AI bubble” that could lead to serious market reversals. Reversals such as what we saw with Enron and WorldCom—a house of cards comes crashing down.
What then?
As a member of the Mississippi Department of Environmental Quality Permit Board, this is a primary reason last week I announced my policy requiring basic water, energy, air quality and financial information and control persons of all data center projects coming before the MDEQ Permit Board.
My policy is simply this: If Mississippi taxpayers are being asked to invest our tax dollars, incentives, natural resources and utility costs into these projects, we the taxpayers deserve clear and honest answers before those investments are made. Not after. The Mississippi Legislature also deserves those answers.
Under the policy I’ve just issued, those answers will be provided to my office at least 30 days prior to any public hearing or vote on a future data center MDEQ permit, and I will be reviewing and assessing those risks in advance of the Permit Board meeting on their applications. I will ask questions. And my vote will depend entirely on the answers to those questions, or lack thereof. I’m only one vote out of seven, but I believe I can get some answers on the record.
Why? The People are fed up with all the secrecy surrounding these data centers. Our financial future is at stake, and the People have real and legitimate concerns about water, energy and utility rates, as well as public health concerns. I believe we need transparency and we need answers.
I will require both, because Mississippians deserve to know the risks of our tax dollar investments beforehand, not after the fact. Let’s do our proper due diligence now—in advance. Let’s learn from the past, and not wait until after it all might come crashing down with a possible mess to clean up.
This MFP Voices opinion essay reflects the personal opinion of its author(s). The column does not necessarily represent the views of the Mississippi Free Press, its staff or board members. To submit an opinion for the MFP Voices section, send up to 1,200 words and sources fact-checking the included information to voices@mississippifreepress.org. We welcome a wide variety of viewpoints.
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