Behind the Servers: How AI Debt Is Shaping a Data-Centre Boom

Global equity markets are basking in AI optimism and hitting fresh highs. Behind that glow, the physical infrastructure — the data centres running these systems — is being built with an expanding array of financial instruments, prompting investors to weigh the payoff against growing complexity and opacity.

This moment differs from past tech frenzies: many companies driving the AI story are profitable and well‑capitalised. Still, economists and regulators are flagging strains in parts of the credit ecosystem where assets are tougher to sell and deal structures are intricate.

Record Investment-Grade Borrowing

Bank of America data show U.S. Big Tech firms focused on AI floated roughly $75 billion of investment‑grade debt in September and October alone — more than double the sector’s typical yearly run rate of $32 billion from 2015–2024.

Meta topped the list with about $30 billion, Oracle followed with roughly $18 billion, and Alphabet has signalled fresh borrowing plans. Oracle’s recently disclosed $38 billion high‑grade loan tied to Vantage data centres highlights how large and creative some financings have grown.

Even so, debt linked to AI still represents only about 5% of the $1.5 trillion U.S. investment‑grade market in 2025. Barclays strategists caution, however, that AI‑related issuance could meaningfully influence credit supply dynamics into 2026.

New hybrid approaches are also appearing. Meta’s $27 billion arrangement with Blue Owl Capital, structured to keep liabilities off its balance sheet, illustrates how firms are engineering bespoke funding solutions.

Oracle Shares Soar Amid Debt Concerns

Oracle has enjoyed a dramatic share rally this year — up about 54% in 2025, its strongest run since 1999 — fuelled by AI revenue momentum. Yet a widening of its credit default swap spreads shows some market players remain wary of rising leverage.

High‑Yield Bonds Enter the AI Space

Firms tied to AI and digital infrastructure are venturing into high‑yield markets. For example, TeraWulf, which transitioned from bitcoin mining to running data centres, issued a $3.2 billion bond rated BB‑, while Nvidia‑backed CoreWeave raised about $2 billion in high‑yield debt.

These instruments can deliver strong returns but come with heightened default risk — a trade‑off investors must balance when financing rapid physical expansion.

Private Credit Gains Ground

Private credit has become an increasingly prominent funding source for AI projects. UBS estimates that AI‑related private loans nearly doubled in the year through early 2025. Such loans offer flexibility but are less liquid in stressed markets, creating potential systemic vulnerabilities.

Morgan Stanley forecasts that private credit could provide more than half of the roughly $1.5 trillion needed for U.S. data‑centre growth through 2028.

Asset‑Backed Securities Join the Race

Securitised structures like asset‑backed securities (ABS) are also being used to fund digital infrastructure, packaging cash flows — such as data‑centre lease income — into tradable securities.

Digital infrastructure ABS stands at about $80 billion, roughly 5% of the $1.6 trillion U.S. ABS market, yet it has expanded eightfold in under five years. Bank of America says data centres account for around 64% of that segment, and estimates point to the market reaching approximately $115 billion by next year.

While ABS are a familiar finance tool, their layered complexity and lower liquidity evoke cautionary memories of past credit crises.

The Bottom Line

The AI wave is accelerating investment in the physical backbone of the technology — powered by a mix of investment‑grade debt, high‑yield bonds, private loans and securitisations. For investors and policymakers, the central challenge is reconciling rapid infrastructure growth with the risks posed by increasingly complex, illiquid financing arrangements.