Each AI company can price itself on an internally consistent story about winning its market. Sum those stories and the implied revenues exceed any market that could exist — the big market delusion. Aswath Damodaran puts a ceiling on it: $142 trillion in global revenues last year against $20–25 trillion in employee costs, which makes the $26 trillion addressable market in SpaceX’s IPO pitch fiction. The sharper question for credit investors is who absorbs the loss when it corrects.

Full analysis: https://open.substack.com/pub/fixedfloating/p/financing-the-big-market-delusion?r=718tew&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true

Josef Pschorn speaks with Aswath Damodaran of NYU Stern about valuing the AI boom, the corporate life cycle, and why the credit side of the build-out carries the asymmetric risk.

Key takeaways:

• ​The biggest loser when the delusion corrects is private credit, not equity — lenders carry the downside without the upside, and “you can’t make interest payments withpotential and promise.”
• ​Financing should act its age: young companies should use converts or no debt; default risk belongs in the cash flows (value the firm twice, weight by survival probability), not in an inflated discount rate.
• ​In distress, equity is a call and debt is a put — a passive lender in a levered company is short an option whose variance the equity holder controls.

Connect with Aswath Damodaran: https://pages.stern.nyu.edu/~adamodar/ | X https://x.com/AswathDamodaran

Connect with Fixed + Floating: https://www.linkedin.com/company/fixed-floating | Xhttps://twitter.com/FixedFloating

Fixed + Floating is for informational purposes only. Not investment, legal, or tax advice.

Recorded: 15.06.2026#fixedfloating #creditmarkets #privatecredit #valuation #Damodaran