by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Today’s Comment opens with our thoughts on the recent level of spending by AI companies. We then examine whether the United Kingdom may be considering rejoining the EU. Next, we briefly cover White House talks on AI oversight, concerns about a short squeeze in Treasurys, and a plane incident that could potentially escalate tensions in the Middle East. As always, we conclude with a review of recent domestic and international economic data.

AI Fundraising: AI providers continue to seek massive financing to build out their computing capacity. On Tuesday, Reuters reported on a leaked IPO prospectus for Anthropic, revealing that the company’s aggressive expansion will significantly increase overall costs and potentially delay its path to profitability. Meanwhile, OpenAI is also considering another round of equity issuance to boost its valuation and raise funds for its own expansion. The push by these two companies for additional capital highlights the growing scale of the global AI buildout.

• Anthropic’s recent prospectus reveals the company continues to incur heavy losses, even as it targets a valuation of $2 trillion. According to the document, the AI developer posted a net loss of $42 billion in 2025 and plans to spend $518 billion on cloud computing and infrastructure over the coming years. Despite these staggering costs, strong revenue growth sustains expectations that the company could transform society on par with the Industrial Revolution and the internet.
• OpenAI is also looking to raise funds, although its IPO is expected to follow Anthropic’s. In its latest funding round, the company aims to raise $30 billion in new capital, which would value it at $1.4 trillion. While OpenAI boasts strong revenue, it faces challenges similar to Anthropic; recently, the ChatGPT maker decided to postpone going public this year while it addresses rising safety concerns surrounding AI.
• Spending on artificial intelligence is scaling at an unprecedented rate. According to The Wall Street Journal, this infrastructure build-out is projected to reach 3.6% of GDP from 2025 to 2032, dwarfing past projects. By comparison, the telecom and fiber expansion during the dot-com bubble accounted for less than a third of that. The investment has grown so massive that spending on information-processing equipment has already surpassed residential housing investment this year.
• The constant capital requirements of AI companies remain a major market factor that increasingly threatens to crowd out other sectors of the economy. This astounding level of spending feeds concerns that it could overheat key economic sectors, potentially pushing bond yields higher across the board. While the infrastructure build-out will likely benefit tech and related industries, persistent borrowing costs could create broader economic headwinds.

Brexit Redo? Nearly a decade after leaving the EU, the UK is considering rejoining the bloc. Prime Minister Andy Burnham has stated that he plans to review the country’s European policy, with his push to rejoin coming as he prepares for new elections in the upcoming year. This decision coincides with other radical proposals under consideration, such as potentially higher taxes to fund social spending. While any reversal of Brexit is far from certain, it could signal what the EU might tolerate from countries seeking to return to the fold.

• Burnham’s push comes as he plans to hold talks with his EU counterparts this autumn at a summit focusing on ways to help promote British companies within the EU bloc. This shift marks a major U-turn for the Labour Party, which in 2024 established strict red lines on the EU, including promises not to rejoin the customs union, the single market, or return to free movement.
• The policy shift comes as the party appears to be pursuing a broader strategic rebrand amid rumors that it is considering early elections. Although Burnham has denied plans to call a new vote, his proposed agenda would almost certainly require a fresh electoral mandate. Beyond rejoining the EU, he has floated tax increases to fund social spending and electoral reforms intended to make it harder for divisive political forces to gain power.

• Since taking over the party in July, Burnham has overseen a rise in Labour’s public support, lifting it to the top of UK opinion polls. The party’s gains have coincided with a steady decline in support for Reform UK, suggesting that Labour may be attracting more moderate voters. If that trend continues, particularly if Labour’s gains increasingly come at Reform’s expense, it could strengthen the case for an early election.
• That said, the potential for the UK to rejoin the EU could help restore confidence in the region as well as make it more politically stable. Since Brexit, the country has cycled through seven different prime ministers. Additionally, a new election could shore up public support for the potential tax hikes, which would ease the country’s debt burden and make its bonds more attractive to investors. The major downside, however, is that the country would have to submit to burdensome EU regulations.

AI Oversight? The White House hosted a meeting with AI executives to discuss regulating the safety risks associated with the technology. Following the discussions, officials announced that industry leaders will self-regulate — a move indicating the administration currently plans to minimize federal oversight. This lighter regulatory approach should make it easier for AI companies to innovate with fewer restrictions, providing a boost to the sector.

Crowded Short: The growing push by investors to offload Treasurys could leave them vulnerable to a rug pull if confidence begins to shift. These concerns come as more investors are betting on higher interest rates following signs that the economy is overheating. As a result, this week’s jobs report could squeeze those investors if it comes in weaker than expected. Such bets may also incur the wrath of US Treasury Secretary Scott Bessent, who has made clear he will penalize investors who stray from market fundamentals.

Plane Attack: A plane heading to Israel was forced to make an emergency landing following a scuffle that left the pilot and co-pilot injured. While nothing has been verified about what took place during the incident, a person who claims to have been on the flight said that an attacker stabbed the pilot. At this time, the facts are still being gathered; however, Israeli Prime Minister Benjamin Netanyahu did hold an emergency meeting. The incident is being investigated as a security matter and could raise tensions in the Middle East if deemed a terrorist attack.

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