Financial Times: Investors dump data center bonds, AI borrowers face moment of reckoning

BlockBeats news, October 16 — According to a report by the UK's Financial Times, investor confidence that the AI boom can generate enough revenue to support the massive debt of data centers is weakening, and the prices of financing bonds for some large US data center projects have recently fallen sharply. Some bonds providing data center construction funding for companies such as Meta, Nvidia, and Oracle have fallen below face value. At the same time, cloud computing infrastructure providers represented by Nvidia-backed CoreWeave have been hit even harder. CoreWeave's bond prices have fallen below 80 cents on the dollar, reaching levels the market typically regards as distressed debt, with yields approaching 15% on Thursday; the company's stock price fell 17% this week, while competitor Nebius dropped 18%. Nvidia has also seen about $270 billion in market value evaporate over the past week. Ludovic Subran, chief investment officer of Germany's Allianz Group, said data center bonds are entering a "Darwinian moment," and projects with weaker credit quality will face a survival test. Power supply and construction delays have widened credit spreads, also reflecting that the market had previously priced the execution risk of data center debt too optimistically.

The core of market concern lies in the huge gap between the scale of AI infrastructure investment and future revenue. OpenAI's postponement of its IPO to next year, as well as the slowdown in Anthropic's quarterly sales growth, have intensified investors' doubts about the sustainability of growth in the AI industry. Technology consulting firm Gartner estimates that by 2030, 80% of new cloud service providers may be unable to continue operating independently. It estimates that AI data center owners will need to generate $8.5 trillion in revenue by the end of 2030 to cover capital and financing costs and achieve reasonable returns, but by then consumer and enterprise spending on AI services is expected to be at most only $3.6 trillion, meaning that by 2032 more than $4 trillion in assets may face impairment risk. In addition, some parts of the United States have tightened restrictions due to water use, noise, and air pollution issues from data centers, and blocked power supply approvals have further dragged down project progress. Investors also remain wary of the circular financing model in the industry in which customers and suppliers finance each other. Nvidia CEO Jensen Huang said on Thursday that he believes CoreWeave does not need Nvidia to provide backstop support, and said the company's cost of capital is declining and its operating strength continues to improve.