JP Morgan suggests that $5trn will be spent on the build out of data centres worldwide from 2026 to 2030 while McKinsey expects that the total investment could reach $7trn during the same period. In aggregate these forecasts imply a basen case annual capital expenditure of $1trn. Headline figures vary across financial institutions and consulting firms. Their guesstimates however all point in the same direction.
To put the scale of this annual capex into perspective Bank of America estimates that it costs $50bn to build one gigawatt GW of data centre capacity. At that rate $1trn of annual investment would fund approximately 20 GW of new capacity three times New York installed electricity capacity of roughly 6.7 GW.Silicon Valley meanwhile seems to move fast to meet this goal.
The 2025 has just witnessed a web of circular financing deals in which hyperscalers and fast growing AI unicorns increasingly investing in each other blurring the line between customers suppliers and investors. OpenAI Oracle and SoftBank has committed $500bn for their Stargate project over the next four years while CoreWeave signed a $14bn deal with Meta to supply computing power to name just two examples. According to Goldman Sachs the consensus capex estimates for AI hyperscalers alone might reach $394m by the end of 2025.
The million dollar question is how such investment will ultimately be financed. For hyperscalers such as Meta this size of commitment in AI investment is consistent with the scale of their balance sheets. The route to funding such investment is less clear however for standalone AI developers. OpenAI generated approximately $20bn of annual recurring revenue ARR in 2025 yet the AI poster child has committed to invest $1.4trn over the next eight years according to Sam Altman.
To answer this question it is useful to examine how AI investment has been funded to date. Hyperscalers funded early AI investment with their own cash flows. In 2025 alone Meta Microsoft Amazon and Alphabet collectively sit on around $500bn free cash flows. Then the debt capital market was tapped as this once in a lifetime technological breakthrough in the 21 century started to appear promising. Constrained by balance sheet leverage ratios they started to shift debt off balance sheet recently.
A case in point is Meta Hyperion Data Center in Louisiana. In October 2025 Meta announced a joint venture with Blue Owl Capital to develop this project through a special purpose vehicle SPV called Beignet Investor. According to the Financial Times this SPV has raised $30bn in total comprising $27bn of loans from private credit funds and $3bn of equity from Blue Owl.
Looking ahead Morgan Stanley addressed the funding question in a report published in July 2025. The bank estimates that capex in data centres by 2028 could reach approximately $3trn half of which could be covered by hyperscalers own cash flows. A further $200bn could be funded by corporate debt issuance specifically it points out that another $150bn could be funded via data centre asset backed securities ABS and commercial mortgage backed securities CMBS.
Data centres are not new to the securitisation market, but their use of structured finance remains limited. The first ever data centre ABS in the world was issued in February 2018 by Vantage Data Centers a data centre operator in key US markets. Rated A by Standard and Poor the securitisation notes raised $1.125bn allowing Vantage to expand in existing and new markets. Three years later Blackstone issued the first ever CMBS in 2021 raising $3.2bn to finance the its $10bn acquisition of data centre operator QTS Realty Trust in June 2021.
In Europe it is still at its early stage as there are only two ABS deals so far. In June 2024. Vantage raised £600m in securitised term notes regarding two data centres located in Wales UK making the first ever data centre ABS in Europe. One year later it issued another €640m in securitised term notes in June 2025 for four data centres located in Frankfurt and Berlin Germany the first ever data centre ABS in continental Europe.According to the New York Times 27 data centre ABS deals have been issued raising $13.3bn in 2025 increased 55 percent year over year.
At present data centre securitisation deals are all issued by data centre operators with long term contractual cash flows from tenant lease payments from either co location customers or hyperscalers. Proceeds are typically used to refinance existing debt and expand data centre capacity.Against this backdrop the web of circular financing in 2025 has brought some of the neocloud providers to the fore offering AI developers access to computing power on a rental basis. The GPU as a Service GPUaaS model shifts AI infrastructure spending from upfront capex to flexible operating costs for AI training and inference.
Leading players have recently secured a number of long term contracts with hyperscalers. Nebius an Armsterdam based neocloud company for example has signed an agreement with Microsoft to provide GPU services with the total contract value up to $19.4bn through 2031 and a $3bn agreement with Meta over five years. These long dated contractual obligations would create predictable and stable cash flows allowing computing power to be securitised in the same way data centre operators issue data centre ABS & CMBS to expand capacity in the competitive GPU as a Service market.
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