The governor based his January budget on good revenue news continuing and was criticized by the Legislative Analyst and others for not taking account of the possibility that an AI bubble will burst, or at least the good revenue news won't continue.
If you want to worry about all of that, and what it could mean for the UC budget, consider this from the Washington Post:
Big Tech is taking on record levels of debt, marking a new chapter in the artificial intelligence boom as names like Oracle, Alphabet and Meta pour big money into massive data centers and the energy systems needed to run them.
Technology companies issued a record $108.7 billion in corporate bonds in the last three months of 2025, according to data from Moody’s Analytics. That’s the largest total for any quarter and roughly double that of the previous three months. And the trend is extending into 2026: Some $15.5 billion in bonds were issued in the first two weeks alone.
For now, investors are assuaged by the eye-popping cash flow numbers from major tech companies. In the past 20 years, Big Tech companies including Google, Microsoft, Meta, Amazon and Apple have built what are arguably the most profitable business models in history. In the third quarter, Google brought in just over $100 billion, with a margin of over 30 percent. All five are trillion-dollar companies, as are such AI darlings as Nvidia, Broadcom and TSMC.
But some economists and business analysts say the massive new bonds are spreading risk throughout the economy, with hundreds of billions being spent on a technology whose profit-making potential is not yet clear.
“It’s a lot of debt, and a lot of it all of a sudden,” said Mark Zandi, chief economist for Moody’s. When companies are funding risky ventures with debt “it does put the broader financial system at risk. If the financial system is at risk, then the broader economy is.” ...
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