Wall Street AI Spending Bubble: Blue Owl Capital's Role and Market Risks

On November 16, 2025, the Wall Street Journal published an article titled “Wall Street Blows Past Bubble Worries to Supercharge AI Spending Frenzy” highlighting that institutional investors, including Blue Owl Capital, are doubling down on AI investments despite growing concerns of a market bubble. The article notes that firms like Blue Owl have raised significant capital for AI-related projects, even as warning signs (e.g., inflated valuations, hype outpacing fundamentals) emerge.

While the full text of the WSJ article was unavailable, supplementary sources confirm the broader trend:

• AI infrastructure spending is projected to reach $3 trillion by 2028 (Morgan Stanley via Yahoo Finance).
• Blue Owl’s key AI investments include a $15B joint venture with Crusoe for a Texas data center, $3B in OpenAI’s Stargate facility, and a $7B Digital Infrastructure Fund III.

:
[1] WSJ Article Headline
[2] Yahoo Finance Bubble Warning
[3] Blue Owl-Crusoe JV

• Blue Owl Capital (OWL)
  : Closed at $14.62 (-1.35% day-over-day), extending its 3-month decline to 23.21% and YTD drop to 38.02% — underperforming the tech sector.
• AI Leaders
  : NVIDIA (NVDA) rose 1.77% (10.17% in 60 days), Microsoft (MSFT) gained1.37% (1.18% in60 days), while Alphabet (GOOGL) fell0.78% and AMD dropped0.46%.
• Sector Performance
  : Technology was the third-best performing sector (2.03% gain) on November16, behind Energy (3.12%) and Utilities (2.16%).

• AI Infrastructure Commitment
  : Blue Owl’s $7B Digital Infrastructure Fund III and Meta joint venture signal sustained institutional investment. However, Derek Thompson’s analysis highlights a critical gap: projected 2026 AI capex ($500B) far exceeds consumer AI spending ($12B annually).

:
[0] Ginlix InfoFlow Analytical Tools
[4] Blue Owl’s $7B Fund
[6] Derek Thompson’s Bubble Analysis

Metric	Value
P/E Ratio	189.81x
ROE	2.35%
Net Profit Margin	1.89%
60-Day Change	-22.97%
Analyst Target Price	$20.50

• NVIDIA
  : 60-day gain (10.17%), Market Cap ($4.63T)
• Microsoft
  : P/E (36.23x), 60-day gain (1.18%)
• C3.ai
  : Negative EPS ($-2.60), P/E (-5.41x)

:
[0] Ginlix InfoFlow Analytical Tools

• Exact details of Blue Owl’s “trillions in investing firepower” from the WSJ article are missing.
• Breakdown of Blue Owl’s AI portfolio (percentage of AUM allocated to AI) is unclear.

• Bull Case
  : AI infrastructure is a long-term growth driver; Blue Owl’s analyst consensus (Buy, target $20.50) suggests upside.
• Bear Case
  : High valuations (OWL’s P/E=189x), low profitability, and capex/spending gap raise bubble risks (echoing dot-com era patterns).

:
[5] Dot-Com Warning Signs

1. Bubble Formation
   : Rapid AI capex without corresponding revenue growth (e.g., C3.ai’s losses) mirrors past market excesses.
2. Blue Owl’s Underperformance
   : Persistent stock declines and low ROE indicate investor skepticism about its AI strategy.
3. Valuation Risk
   : NVIDIA’s $4.63T market cap and OWL’s extreme P/E ratio leave little room for disappointment.

• Blue Owl’s AI joint venture returns (Crusoe/Meta projects).
• AI revenue growth vs capex projections.
• Regulatory scrutiny of AI infrastructure.

:
[0] Ginlix InfoFlow Analytical Tools
[6] Derek Thompson’s Bubble Analysis
[7] Meta JV
[8] OpenAI Investment