FT: Investors dump data centre bonds as AI borrowers face ‘Darwin moment’

Investors are losing faith that AI revenues can cover the debt financing America’s data centre boom. Bonds funding projects leased to Meta, Microsoft, Nvidia and Oracle have slipped well below par, while debt issued by neocloud CoreWeave has fallen below 80 cents on the dollar, a level usually seen as distressed. The sell-off follows OpenAI’s delayed listing, slower sales growth at Anthropic and a Gartner forecast that AI spending will fall trillions of dollars short of what data centre owners need. Power delays and local opposition to new sites are adding to the strain on the weakest borrowers..By Ramsay Hodgson.Investors are losing confidence that revenues from the AI boom will be sufficient to support the vast debt piles financing data centres, pushing bonds backing some of the largest US infrastructure projects into increasingly stressed territory.Prices of bonds issued to fund prominent data centres where Meta, Nvidia, Oracle and others will become tenants — such as “Hyperion” and “Project Excalibur” — have fallen well below par in recent weeks.Investors are also dumping debt issued by so-called neocloud companies — of which the best known is Nvidia-backed CoreWeave — which have been the most aggressive in how they finance their AI build-out.OpenAI’s decision to delay its initial public offering until next year and a slowdown in Anthropic’s quarterly sales growth have triggered doubts about the sustainability of the AI boom, as analysts point to a multitrillion-dollar gap between infrastructure spending and the revenues needed to finance it.“Data centre bonds are having their Darwin moment, where the weakest credits struggle to survive,” said Ludovic Subran, chief investment officer at Germany’s Allianz. “The surge in credit spreads following power and construction delays show that data centre debt is priced too tight for execution risk.”The price of debt issued by Blue Owl and Meta-backed special purpose vehicle Beignet Investor to fund the Hyperion project has slipped from above par in early July to a little under 92 cents on the dollar.Separately, bonds backing two Hut 8-developed projects — one in Louisiana and another in Texas leased by Nvidia — have fallen to about 94 and 92 cents on the dollar respectively. Bonds for the Blackstone-owned QTS data centre in Georgia dubbed “Project Excalibur” and leased to Microsoft have slipped below 88 cents on the dollar.Neocloud providers have been hit even harder. Bonds issued by CoreWeave have sunk below 80 cents on the dollar — prices typically considered distressed — pushing yields close to 15 per cent on Thursday. The company’s shares are down 17 per cent this week, while rival Nebius has lost 18 per cent.AI chip giant Nvidia, which has invested tens of billions of dollars in numerous neocloud and AI start-ups, has itself shed about $270bn in market value over the past week.Chief executive Jensen Huang on Thursday told Bloomberg he did not think CoreWeave would need a backstop from Nvidia. “I’m optimistic. Their cost of capital is actually decreasing,” he said, adding that CoreWeave’s strength was “improving every day”.The rout has come as a report this week by tech consultancy Gartner predicted that 80 per cent of neoclouds would “cease independent operations” by 2030, because of a multitrillion-dollar gulf between the pace of capital spending and expected returns from AI.Gartner said AI data centre owners would need to generate revenues of $8.5tn by the end of 2030 to cover their capital and financing costs and generate healthy returns on those investments. But it forecast that consumer and corporate spending on AI services that would flow to data centre providers would reach “no more than $3.6tn”.“A continued AI infrastructure investment trajectory could leave more than $4tn in asset value exposed to writedown risk through 2032,” Gartner said.The FT reported last week that OpenAI’s annualised revenue — one of the most important indicators of overall AI demand — was $20bn less than the company had signalled. That sparked a deep equity market sell-off that has renewed this week.Meanwhile, a political backlash to data centres has swept the US, driven by concerns over water, noise and air pollution, stalling some projects. States including New York and Texas have imposed strict restrictions on new proposals while others are considering similar curbs.Data centre opposition is “something we’re watching closely”, said Tom Murphy, head of US investment grade credit at Columbia Threadneedle. “I wouldn’t say it’s changing our investment decision-making, but it does make data centres that are already up and running more valuable.”Last month, the FT reported that about $18bn of loans tied to Oracle’s “Project Jupiter” data centre in New Mexico had slid into stressed territory after the site hit permitting delays with its power supply because of local opposition. Debt issued to fund the construction of Oracle’s AI campus in Michigan has also sold off to 87 cents on the dollar, down from par in July..Read more:.Human neurons power next-gen data centres in Singapore and Melbourne.Investors have also been worried about circular financing, where customers and suppliers finance each other. A recent report from the Bank for International Settlements found that “a significant portion of financing and commercial relationships in AI are self-referencing”..© 2026 The Financial Times Ltd..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

FT: Investors dump data centre bonds as AI borrowers face ‘Darwin moment’

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