Stories
AI Boom Faces Debt Shock: Rising Costs Pressure Data Center Companies
C
CNBC Awaaz•29-09-2026, 09:11
AI Boom Faces Debt Shock: Rising Costs Pressure Data Center Companies
- •Companies in the rapidly growing AI business are facing challenges from rising debt costs, with US Treasury yields reaching their highest since 2007.
- •The 10-year US Treasury yield is around 5.17%, potentially forcing companies taking on new debt to offer higher interest rates.
- •JPMorgan Chase estimates approximately $4.1 trillion in debt could be issued for AI-related projects by 2030.
- •Major tech companies like Amazon, Google, Meta, and Microsoft are less affected due to strong credit ratings, but smaller, debt-dependent firms face difficulties.
- •Oracle's shares declined amidst reports of increasing costs for its New Mexico data center project, though the company states it's on track.
Key Questions Answered
According to an estimate by JPMorgan Chase in June, approximately $4.1 trillion in debt could be issued for AI-related projects by the year 2030.
CoreWeave noted in its filings that every 1% increase in interest rates could cause its interest expenses to rise by approximately $30 million.
Major technology companies such as Amazon, Google, Meta, and Microsoft possess strong credit ratings, which allow them to borrow money from the market at significantly lower costs than smaller, newer competitors.
