JPMorgan expects AI hyperscale data center operators to invest approximately $5.5 trillion by 2030, an increase of $400 billion from its previous forecast.
Of this total, about $4.1 trillion is expected to come from debt financing, indicating that these companies will rely on borrowed funds to cover a larger proportion of their expenditures. The bank also forecasts that the high-grade bond market will provide $2.1 trillion in financing for data centers over the next five years. June 17 – JPMorgan recently raised its estimates for the spending and borrowing required by major tech companies to build artificial intelligence (AI) infrastructure. In a research note released on Tuesday (June 16), the bank’s strategists stated that they expect AI hyperscale data center operators to invest approximately $5.5 trillion by 2030, an increase of $400 billion compared to the November forecast. The report noted that approximately $4.1 trillion of this amount will come from debt financing, reflecting market expectations that these companies will use borrowed funds to cover a larger share of their spending. The AI bond issuance wave Currently, the investment race in AI infrastructure has significantly boosted corporate bond issuance. JPMorgan strategists, led by Tarek Hamid, pointed out that since the bank’s November forecast, bond issuance related to AI and data centers has exceeded $300 billion. They also stated that data center bond issuance has been the largest driver of near-record bond issuance volumes earlier this year. Notably, chipmaking giant Nvidia joined the wave of large-scale bond issuance by tech giants on Monday (June 15), issuing $25 billion in high-grade bonds. The issuance attracted subscriptions of up to $85 billion, with investors eager to participate in the AI boom. In the report, JPMorgan strategists predicted that over the next five years, the high-grade bond market will lead the AI financing wave, providing an estimated $2.1 trillion in financing for data centers. They stated that the leveraged finance market will provide an additional $350 billion. The report stated, “The corporate credit market has dominated so far, but we expect issuers to utilize every capital market to support their growth needs.” Of the remaining funding requirements, $1 trillion will come from internal cash flow, $400 billion from incremental equity capital, and $300 billion from structured product markets, leaving $1.4 trillion still needing alternative capital. The report noted that hyperscale data center operators continue to maintain “remarkable profitability.”These strategists project that by 2027, these companies’ cash flows will exceed $900 billion. Although they currently rely on leveraged financing, they can shift to operating cash flows or other markets in the future when interest rates become less attractive.
