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Five trillion dollars of AI debt
Cash and credit
Those figures come from SemiAnalysis's modeling. Google, Microsoft, Amazon, and Meta funded a large share of the buildout so far and were more than half of compute. They now spend all their cash on capex and raise debt on top, as Meta, Amazon, and Google already do and Microsoft will soon. Stopping buybacks to buy compute infrastructure was an easy first step for Google or Meta, with a small effect on the market.
Who lends next
By 2028 the hyperscalers and their suppliers are each raising hundreds of billions of dollars of debt. Semiconductor companies like Nvidia, Broadcom, and the memory makers may fund some of the capex. Traditional infrastructure investors who used to fund bridges may fund data centers. Savers may choose hyperscaler or data center debt over home credit or government debt.
Paying 20 percent
Anthropic is willing to pay 20% rates on debt for its next billion dollars of capacity, because its revenue from that capacity will be large and 20% still beats renting from SpaceX at $50 billion a gigawatt. All of this competing borrowing pushes interest rates up.
How do companies fund data centers with debt?
Large companies sell bonds backed by their overall cash flow. Data center developers often use project finance, where loans are secured by the building and its customer leases. Lenders accept the loans because a signed lease from a strong tenant offers steady payments.
Why do share buybacks matter to markets?
A buyback reduces the number of shares outstanding, which raises earnings per share and adds steady buying pressure on the stock. S&P Dow Jones Indices reported that S&P 500 companies repurchased more than 900 billion dollars of stock in 2024. Redirecting even part of that money to data centers would remove a large source of demand for shares.
Why does heavy borrowing push interest rates up?
Savings in an economy are limited, so when borrowers compete for the same funds, lenders can demand higher rates. Economists call this crowding out. Governments, companies, and households all draw from the same pool of savings.
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