CFOs face a tough choice on AI spending as borrowing costs rise, expert warns

I had a fireside chat with Williams, a master lecturer at Boston University’s Questrom School of Business and a former bank examiner for the Federal Reserve Bank, during a Fortune Modern CFO dinner, sponsored by Deloitte. 

“I think it’s going to be reduced,” he said of AI spending, arguing that a more difficult financing environment will bring greater scrutiny to investment decisions. 

His cautionary concerns were part of a broader discussion about the post-midterm economic outlook, inflation, interest rates and risks across the AI investment ecosystem. Williams urged executives to prepare for higher capital costs without allowing uncertainty to paralyze investment.

“If we do nothing, then we’re going to lose our competitive edge,” he said.

For CFOs, that means being more disciplined about how they fund AI initiatives and evaluate their returns. Williams recommended having explicit measures of success or failure along with connecting project spending to financial results and considering shorter-term financing rather than automatically borrowing for the long term.

Post-midterm election, regulatory uncertainty adds another aspect to consider. Greater uncertainty can lower growth assumptions and reduce a project’s net present value, making fewer investments financially attractive, Williams explained.

The pressure won’t be evenly distributed across the AI industry. He described a divide between highly rated technology companies and lower-rated AI borrowers, with weaker credits facing greater financing pressure. 

Companies with stronger balance sheets may be better positioned to continue investing, while more leveraged businesses could find themselves forced to reconsider their plans, he said.

That preparation should extend beyond investment budgets. Williams suggested finance leaders “stress-rest” accounts receivable and consider whether customers would be able to pay if economic conditions weakened.

He tied those risks to his broader inflation outlook. Persistent price pressures could keep borrowing costs elevated, raising the hurdle for new investments and challenging companies’ ability to generate sufficient returns.

“I think you should assume the cost of capital is going up,” he said when I asked what CFOs should do before year-end.

That preparation should extend beyond investment budgets. Williams suggested finance leaders analyze accounts receivable and consider whether customers would be able to pay if economic conditions weakened. He also questioned whether consumer spending would continue supporting the economy through the holiday season.

But his message is not to retreat from AI. Instead, he predicts finance chiefs will be more discerning about where they place their bets. 

“Hold your chief risk officers close,” Williams said. “I think they’re going to be very useful for you in the next couple of months.”

Sheryl Estrada
Sheryl.Estrada@fortune.com

Leaderboard

Dev Ahuja was appointed CFO of QXO (NYSE: QXO), a building products distributor, effective in January. He will succeed Ihsan Essaid, who will become vice chairman, an executive role, at the same time. Ahuja brings more than two decades of experience. He joins from aluminum producer Novelis, where he has served as CFO since 2016. Previously, he held CFO roles at Novartis for Alcon North America, Alcon Japan and the company’s South Korean business. Essaid, who has served as QXO’s CFO since July 2024, will oversee mergers and acquisitions and capital-raising activities, reporting to chairman and CEO Brad Jacobs.

Adrian Wood was appointed CFO of BHP Group Limited, a global resources company, effective Feb. 17. He will succeed Vandita Pant, who will step down following the release of BHP’s half-year results on Feb. 16 and remain with the company through March 29. Wood currently serves as VP of projects, minerals Australia. He joined BHP in 2015 and previously served as VP of finance, minerals Australia, and group investor relations officer. He brings more than 25 years of experience, including at UBS and Macquarie Group.

Big Deal

Stanford’s 2026 AI100 report finds that AI has become a mainstream force reshaping science, industry, and society faster than expected, while governance and public oversight struggle to keep pace.

AI is accelerating scientific discovery and disrupting fields once considered resistant to automation, including creative work, software development, and mathematics. Yet the unprecedented investment boom in AI infrastructure has brought environmental pressures and concerns about a financial bubble, with broad economic gains and corporate returns still uncertain.

The central message is that AI’s trajectory should be shaped through meaningful public participation and coordinated, enforceable governance, not solely technological competition and market forces.

Going deeper

Overheard

“It is up to the board to ensure a company’s owners benefit from the genius of founders but are protected by the madness.”

—Yale Chief Executive Leadership Institute’s Jeffrey Sonnenfeld and Steven Tian write in a Fortune opinion piece titled “Nvidia board’s idolatry of Jensen Huang could open the door to shareholder lawsuits in Delaware Chancery Court.”