The AI Debt Bill Is Coming Due, But Biotech Has Revenue to Show for the Boom

Key Points

• AI builders are funding the boom with debt and stock sales, while the companies applying AI carry none of that financing risk.
• Tempus AI posted $411.5 million in third-quarter revenue, up 23%, with positive adjusted EBITDA and raised full-year guidance.
• Recursion Pharmaceuticals shows the other side of the trade—real clinical results, but a runway bought with dilution rather than earnings.

The Nov. 5 sell-off settled an argument that had been building for weeks. The Nasdaq 100 fell 6.4%, its worst session since 2020, and the Philadelphia Semiconductor Index dropped more than 12% after Democratic midterm wins in key data-center states raised the odds of tougher AI regulation.

The risk being priced is to the buildout itself: the debt, the permits, the power, and now the politics. Companies that buy compute rather than pour concrete carry none of that.

History has run this script before. Many of the companies that laid the railroads went bankrupt under their debt while grain traders built fortunes on the rails. The dot-com fiber builders met the same fate as Alphabet NASDAQ: GOOGL, Amazon.com NASDAQ: AMZN and Meta Platforms NASDAQ: META turned that bandwidth into empires.

The biggest AI winners may never own a data center. Biotech is making an early case for that role.

Infrastructure Debt and Policy Risk Now Sit With the Builders

Debt is the weak point in the builder story, per Ross Givens, market strategist at Traders Agency. Neoclouds such as CoreWeave NASDAQ: CRWV carry expensive borrowing, and even cash-rich hyperscalers are issuing stock and bonds to fund capital expenditures on AI capacity.

New technology gets cheaper. As compute costs fall, builders could be left servicing heavy debt against shrinking pricing, while the companies applying AI capture the gains. Givens compares it to Netflix NASDAQ: NFLX replacing the trip to Blockbuster. The winner didn’t build the pipes.

He isn’t calling the end of AI, but money is moving from the companies making it to the ones using it. Biotech shows that shift most clearly: drug developers sit on enormous datasets, and AI lets them test and design treatments far faster.

Tempus AI Gets Paid on Both Ends of Cancer Data

Tempus AI NASDAQ: TEM sits closest to the cash. It tests tumors from cancer patients and builds a library of results. Doctors run cases through its models to find the treatments most likely to work, and drug companies license that same data to design new drugs.

Third-quarter revenue reached $411.5 million, up 23%, with adjusted EBITDA of $25.6 million against $1.5 million a year earlier, and management raised full-year guidance above $1.60 billion. New collaborations with Bristol Myers Squibb NYSE: BMY, Moderna NASDAQ: MRNA and Merck NYSE: MRK should add roughly $192.5 million over five years. Shares climbed about 8% into the mid-$70s right after the rout, against a 52-week range of roughly $41 to $89.

Givens attributes the volatility to size, the same dynamic NVIDIA NASDAQ: NVDA showed when it was small. He sees room for a $14 billion company to become a $140 billion one and favors a 15% to 20% trailing stop over waiting for a pullback.

Recursion Pharmaceuticals Funded Its Runway With Dilution

Recursion Pharmaceuticals NASDAQ: RXRX is the earlier, riskier position. Robots run millions of cell experiments while AI selects which compounds to develop. In the TUPELO study of REC-4881, an oral therapy for familial adenomatous polyposis, 87% of evaluable patients showed reduced polyp burden after 12 weeks, 13 of 15 in all.

The balance sheet needs a closer read. An October stock offering of 61.54 million shares at $3.25 raised roughly $187.2 million, bringing pro forma cash near $748.7 million and pushing the runway into 2029 from early 2028. Existing holders paid for that extra time.

Shares cleared the $3 to $4 band that held most of the year, then slid nearly 10% in the sell-off and settled near $3.50, the lower edge of the level Givens treats as keeping the idea in play. The risk is binary: these stocks can lose most of their value overnight on a failed readout, and one approved drug could multiply the share price.

Biotech ETF Exposure Spreads the Single-Trial Risk

For investors who don’t want everything riding on one trial, the iShares Biotechnology ETF NASDAQ: IBB spreads exposure across 248 holdings led by Gilead Sciences NASDAQ: GILD, Amgen NASDAQ: AMGN and Vertex Pharmaceuticals NASDAQ: VRTX.

It set a record closing high above $221 in early November, then gave back a few percentage points in the rout, rather than the double-digit hit the chipmakers took.

The trade-off is that IBB is a broader biotech investment, not a direct bet on AI-driven drug discovery.

Its performance will also depend on clinical trial results, regulatory decisions, and drug pricing, even if AI adoption accelerates.

What Would Break the AI Adoption Trade

None of this requires the buildout to collapse. It requires adoption to keep spreading and biotech to stay a leadership group. Rates are the pressure point, with the 10-year yield near 4.9% and a December hike back on the table, which squeezes unprofitable, long-dated names hardest.

Givens walks through the entries, stops and chart setups behind positions like these every week, which is where the difference between owning a trend and guessing at one shows up. Investors who want that education can join Ross Givens’ Black Ops Trading Club for live weekly sessions.

Watch whether biotech keeps absorbing capital on the days the chip trade breaks. Those sessions show whether this rotation has legs or was one week of fear.