Future Download
A.I., Crypto & Tech Stocks
Rising Debt Risks Fueling the AI Data Center Boom: Five Key Hotspots
The explosive growth in artificial intelligence is pushing tech giants to rapidly expand data center infrastructure, increasingly funded through surging debt issuance.
According to UBS, AI-related data center and project financing has skyrocketed to $125 billion this year, up from just $15 billion in 2024. While this fuels innovation, experts including the Bank of England warn of potential financial stability risks if AI valuations falter or demand falls short.
Big Tech companies, traditionally reliant on strong cash flows, are now turning to public and private debt markets to finance massive capital expenditures. Analysts highlight opportunities in this shifting landscape but emphasize caution, as much of the investment remains unproven in terms of timely delivery and sustained demand.
Delve’s AI Copilot handles SOC 2, HIPAA, and ISO end to end while reading your policies, completing evidence, and automating the tasks that usually slow teams down during Q4.
Instead of spending weeks gathering documents or chasing approvals, Copilot keeps every requirement moving in the background so your audit stays on track even during the holiday rush.
The outcomes tell the story.
Lovable achieved SOC 2 in just 20 hours.
Wisprflow closed Mercury and Superhuman in one month.
11x unlocked 1.2 million dollars in ARR through accelerated compliance.
This season, skip the stress and let Copilot deliver the cleanest audit you have ever had.
Use code MBXMAS for 1,500 dollars off until December 31st.
Here are the five major debt hotspots emerging in the AI infrastructure race:
Oracle's Escalating Default Concerns: Oracle's aggressive AI spending and disappointing forecasts triggered a sharp stock decline, amplifying worries about its debt load. Credit default swaps (CDS) — insurance against default — have spiked to five-year highs, underscoring investor unease despite major contracts like its $300 billion OpenAI deal.
Boom in Investment-Grade Borrowing: Tech megadeals dominate the investment-grade (IG) market, with Oracle issuing $18 billion and Meta $30 billion recently. AI-linked firms now represent 14% of JP Morgan's IG index, overtaking U.S. banks, though they remain a fraction of projected 2025 issuance.
Record High-Yield (Junk) Bond Issuance: Lower-rated tech companies are tapping the high-yield market at unprecedented levels for AI projects. However, some portfolio managers are steering clear, viewing these bonds as requiring equity-like compensation due to uncertainties in data center profitability.
Private Credit's Expanding Role: Non-bank lenders are stepping in aggressively, with AI private credit loans nearly doubling recently. Morgan Stanley projects private markets could finance over half of the estimated $1.5 trillion needed for global data center expansion through 2028.
Growth in Asset-Backed Securities (ABS): Securitized products bundling data center rents from Big Tech tenants are gaining traction. The digital infrastructure segment has grown ninefold in under five years to $82 billion, with expectations of $50-60 billion more supply in 2026 — though post-2008 caution lingers.
As debt becomes a cornerstone of AI advancement, market watchers stress the need for proven returns to sustain investor confidence amid this rapid transformation.
Resources
Thank you for subscribing to the Future Download!
If you need help with your newsletter, email our Arizona-based support team at [email protected]
👩🏽⚖️ Legal Stuff
FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT ADVICE. Morning Download products and services are offered for educational and informational purposes only and should NOT be construed as a securities-related offer or solicitation or be relied upon as personalized financial advice. We are not financial advisors and cannot give personalized advice. There is a risk of loss in all trading, and you may lose some or all of your original investment. Results presented are not typical. This message may contain paid advertisements, or affiliate links. This content is for educational purposes only.
Please review the full risk disclaimer: MorningDownload.com/terms-of-use
Just For You: Become part of the Morning Download’s SMS Community. Text “GO” to 844-991-2099 for immediate access to special offers and more!