CFOs face a tough choice on AI spending as borrowing costs rise, expert warns
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.
Key points
- Companies may need to rethink how much they spend on AI as financing costs rise and economic uncertainty grows.
- “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.
- 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.
But pulling back too aggressively could leave them at a competitive disadvantage, finance expert Mark Williams told a group of CFOs gathered in New York City on Tuesday evening.
Additional details
- “I think you should assume the cost of capital is going up,” he said when I asked what CFOs should do before year-end.
- Williams urged executives to prepare for higher capital costs without allowing uncertainty to paralyze investment.
- He also questioned whether consumer spending would continue supporting the economy through the holiday season.
- For CFOs, that means being more disciplined about how they fund AI initiatives and evaluate their returns.
- 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.
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