On Tuesday the U.S. government paid 5% to borrow for 10 years. On the same day a five-year-old AI company asked public investors to value it at as much as $1.4 trillion. Both things can be true, and the gap between them says a lot about where capital is going.
Start with the price of money. The Treasury’s $42 billion 10-year sale cleared at 5.02% with the weakest demand since May, after an inflation report that pushed two-year yields up by the most this year. A few hours later Fox sold $8.4 billion of bonds to take out its Roku bridge loan, paying more than 7% on its longest debt. Akamai got a 1% coupon only by handing investors a slice of its stock’s upside. Nobody is getting cheap money by accident anymore.
Paying for what can’t be replaced
And yet the checks keep getting bigger. Anthropic set its range at $70 to $78, aiming to raise up to $64 billion with $26 billion more lined up from its own suppliers, and people familiar with the deal say orders already cover it. Mercor doubled its valuation to $20 billion. Oura paid $625 million in cash for a young medical-AI company rather than wait for the IPO window.
The common thread is scarcity. In the Permian, Diamondback and KKR paid about $2.1 billion for control of a water network that drilling can’t happen without, and Archrock paid up to $450 million for off-grid power because the utility lines can’t keep up. In AI, buyers are paying for the few companies that own the models, the training data or the compute. Higher rates raise the bar for ordinary assets. They don’t do much to the price of an asset that nothing else can replace.
The risk in the logic
That reasoning works until scarcity turns out to be temporary. Water networks and power plants come with contracts and pipes in the ground. A trillion-dollar valuation comes with a revenue run rate and a promise. With risk-free money at 5%, the margin for error on the promise is thinner than it was a year ago. Thursday’s 30-year auction and Anthropic’s pricing next week will show how far investors are willing to stretch.
