CFOs Weigh AI Spending as Borrowing Costs Rise

Finance expert Mark Williams told CFOs at a Fortune Modern CFO dinner in New York City on Tuesday evening that companies may reduce AI spending as borrowing costs rise and economic uncertainty grows. Williams, a master lecturer at Boston University’s Questrom School of Business and former bank examiner for the Federal Reserve Bank, said a tougher financing environment would bring greater scrutiny to investment decisions. He cautioned that cutting too aggressively could leave companies at a competitive disadvantage: “If we do nothing, then we’re going to lose our competitive edge.”

Williams urged executives to prepare for higher capital costs without letting uncertainty halt investment. He recommended setting explicit measures of success or failure, linking project spending to financial results, and considering shorter-term financing instead of automatically borrowing long term. Greater regulatory uncertainty after the midterm elections, he said, can lower growth assumptions and a project’s net present value, leaving fewer investments financially attractive.

Williams said financing pressure will differ across the AI industry, contrasting highly rated technology companies with lower-rated AI borrowers. Businesses with stronger balance sheets may be better positioned to keep investing, while more leveraged companies could have to reconsider their plans. He also advised finance leaders to stress-test accounts receivable by assessing whether customers could pay if economic conditions weakened, and to consider whether consumer spending would support the economy through the holiday season.

Persistent price pressures could keep borrowing costs elevated, increase the hurdle for new investments and make sufficient returns harder to generate. Williams told CFOs to assume the cost of capital is going up before year-end. His message was not to retreat from AI, but to be more discerning about investments and keep chief risk officers close over the next couple of months.

Finance expert Mark Williams told CFOs at a Fortune Modern CFO dinner in New York City on Tuesday evening that companies may reduce AI spending as borrowing costs rise and economic uncertainty grows. Williams, a master lecturer at Boston University’s Questrom School of Business and former bank examiner for the Federal Reserve Bank, said a tougher financing environment would bring greater scrutiny to investment decisions. He cautioned that cutting too aggressively could leave companies at a competitive disadvantage: “If we do nothing, then we’re going to lose our competitive edge.”

Williams urged executives to prepare for higher capital costs without letting uncertainty halt investment. He recommended setting explicit measures of success or failure, linking project spending to financial results, and considering shorter-term financing instead of automatically borrowing long term. Greater regulatory uncertainty after the midterm elections, he said, can lower growth assumptions and a project’s net present value, leaving fewer investments financially attractive.

Williams said financing pressure will differ across the AI industry, contrasting highly rated technology companies with lower-rated AI borrowers. Businesses with stronger balance sheets may be better positioned to keep investing, while more leveraged companies could have to reconsider their plans. He also advised finance leaders to stress-test accounts receivable by assessing whether customers could pay if economic conditions weakened, and to consider whether consumer spending would support the economy through the holiday season.

Persistent price pressures could keep borrowing costs elevated, increase the hurdle for new investments and make sufficient returns harder to generate. Williams told CFOs to assume the cost of capital is going up before year-end. His message was not to retreat from AI, but to be more discerning about investments and keep chief risk officers close over the next couple of months.