AI data centers need so much borrowing because companies must pay for land, buildings, servers, networking, power and cooling before those assets can earn revenue. The buildout is happening quickly, while construction and power connections take time. Companies therefore combine their own cash with debt, leases, partner capital and customer-backed financing. These arrangements help fund large projects, but they leave fixed obligations that still have to be met if a facility is delayed, underused or less profitable than expected.
What makes an AI data center so expensive?
A data center is not just a building full of AI chips. It is a bundle of long-lived assets: land, a building shell, servers and accelerators, networking, electrical equipment and connections, backup systems, and cooling. Each part costs money, and several must be ready before a facility can support paying workloads.
Alphabet’s 2025 Form 10-K defines its technical infrastructure to include servers, network equipment, data-center land, and building construction and improvements. The company also identifies depreciation, energy, equipment and network capacity as infrastructure costs, and says AI offerings require more computing power than its historical consumer and enterprise services. Its spending figures illustrate the scale, but are company-wide rather than exclusively for AI data centers.
| Measure | Reported figure | Scope and attribution |
|---|---|---|
| Capital expenditures | $52.5 billion in 2024; $91.4 billion in 2025 | Alphabet-wide amounts in Alphabet’s 2025 Form 10-K, filed in 2026; not all spending was identified as AI data-center investment. |
| Expected technical-infrastructure investment | Expected to increase significantly in 2026 compared with 2025 | Alphabet’s forecast in its 2025 Form 10-K; the filing does not give a specific total in this statement. |
| Average greenfield data-center project capex | $800 million in 2024 to more than $3 billion | Carlyle’s January 2026 analysis, attributing the project-cost data to Infralogic; this is not a universal cost for every facility. |
Power and cooling add another layer of cost and complexity. Equinix says new IBX data centers are being built for power and cooling needs twice those of its previous IBX facilities. A site may have room for more cabinets yet lack the electrical capacity to run them, and delayed equipment can slow expansion. Without usable power, cooling and delivered equipment, a completed shell may not generate the revenue its financing plan assumes.
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Why use borrowing when a company has cash?
Large, profitable technology companies can fund some projects from operating cash flow. But a rapid investment surge competes with ordinary operating costs, research, acquisitions and shareholder payouts, among other uses of cash. Borrowing lets a company build sooner or preserve cash for other priorities; it does not by itself mean the company is insolvent or unable to pay for a project from cash.
Borrowing has also grown alongside the investment. Carlyle’s January 2026 analysis, citing its own analysis and Bank of America, reports that hyperscalers issued nearly $100 billion in loans and bonds in the final four months of 2025. It also reports that AI-related borrowing accounted for 30% of net investment-grade issuance during 2025, three times the 2024 share. These figures use Carlyle’s definitions and stated sources; they are not a complete measure of every financing commitment or company obligation.
Borrowing is only one route. A company may finance a facility through a parent-company bond, a lease, a joint venture, project-level debt, securitization, or an arrangement supported by customer contracts. The form matters because it determines who owes the money, what cash flows or assets support repayment, and which party bears the risk if the project fails to perform.
How the main financing structures work
| Structure | Who typically has the obligation? | What can support financing? | Key trade-off |
|---|---|---|---|
| Corporate loans or bonds | The operating company or parent that borrows. | The company’s overall credit and cash flow. | Flexible funding, but debt service adds to company obligations and can use up borrowing capacity. Alphabet reports issuing debt in 2025. |
| Finance or operating leases | The company or project tenant that commits to lease payments. | The right to use a facility or equipment, with payments scheduled over time. | Can provide access without buying every asset outright, but fixed payments remain important even when they are not conventional bond debt. Alphabet expects to enter finance leases primarily for data centers. |
| Joint ventures and partner capital | The parties involved, as set out in the project’s contracts. | Capital, assets or commitments contributed by partners or customers. | Can reduce the amount one party must fund alone, but ownership, control and risk are shared. Equinix describes using joint ventures to develop and operate xScale data centers. |
| Project-level or non-recourse debt | A project company, with recourse limited where the structure and contracts allow. | Project assets and expected project cash flows. | Can tie financing to a specific asset and its duration, but repayment depends more directly on that project’s performance. Cipher Digital says it has increasingly used project-level financing and structured it as non-recourse where possible. |
| Securitization | The borrowing platform, according to the transaction structure. | A pool of assets or cash flows used to raise capital. | Can broaden access to funding, but depends on the quality and terms of the assets or cash flows. Brookfield says its U.S. platforms raised over $4 billion in securitization markets during 2025. |
| Customer-backed financing or credit support | The party named in the contract; a customer, parent or other counterparty may support specified obligations. | Long-term contracts, prepayments, guarantees or backstops. | Can improve lender confidence, but the support may be limited to particular obligations and does not guarantee the project’s overall success. |
These categories can overlap. A project might use partner capital, a long-term customer lease and debt at both the developer and parent-company levels. A headline bond total therefore may not show all the fixed commitments connected to a buildout.
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Why lenders may be willing to fund projects
Lenders and investors need a plausible route to repayment. Long-term customer contracts can make future revenue more visible, while a strong customer may be viewed as a more reliable payer. A facility or equipment may also have collateral value. These features can help a project secure financing, but they do not make revenue certain or eliminate construction and operating risks.
Brookfield says its development projects are underpinned by long-term contracts, that it seeks strong investment-grade counterparties, and that it matches capital structures to the term of contracted cash flows. It describes this as its own investment approach, not as a guarantee that every data-center project has secure revenue.
Companies may also provide specific credit support for counterparties. Alphabet reports credit support, including backstops and guarantees, for certain infrastructure counterparties. Cipher Digital’s 2025 filing describes a Google backstop for certain Fluidstack obligations under specified Barber Lake high-performance computing leases. Neither disclosure means that a parent guarantees every project or all lease payments: the contract’s scope and conditions matter.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What can go wrong after the money is borrowed?
Debt and contractual payments can continue even when expected income is late or lower than planned. A project may face building or permitting delays, a late grid connection, unavailable power, equipment shortages, or construction costs that outlast the expected schedule. Equinix identifies power limits and equipment delays as constraints on expansion.
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Even an operating facility can disappoint financially. Customers may use less capacity than expected, decline to pay enough to cover costs, or fail to renew contracts. Capacity can be overbuilt relative to what customers want or can afford. A technology shift may also change which equipment or workloads are valuable before long-lived assets have been fully paid for.
Brookfield’s Q4 2025 letter to unitholders identifies overbuilding, technological change and uncertainty about whether AI demand will justify investment as risks. It also estimates that corporate investment in AI-related infrastructure reached approximately $500 billion in 2025, including more than $350 billion from five U.S.-based hyperscalers. That is Brookfield’s estimate, not a universal accounting total; definitions of AI-related infrastructure and investment can differ.
How to assess a data-center financing claim
When a company or investor says a project is funded, financed or backed, the most useful questions are about the actual obligation and its repayment source:
Quick Recap
- Who owes the money? Identify whether the borrower is a parent company, developer, project entity or tenant, and whether another party has agreed to support any payments.
- What supports repayment? It may be general company cash flow, a specific asset, a lease, a customer contract or a defined guarantee. Do not treat these as interchangeable.
- Do the time periods match? Compare the length of the debt or lease commitment with the customer contract and the useful life of the facility and equipment. A mismatch can leave obligations after a revenue source ends or an asset loses value.
- Who carries delivery and power risk? Check who bears the cost of delays, unavailable grid capacity, or equipment that arrives late.
- How broad is any guarantee or backstop? Look for the specific obligations, counterparties, limits and conditions covered; a limited support agreement is not a blanket promise to repay all project debt.
- Are the figures comparable? Spending, borrowing and investment estimates may cover different companies, periods and asset types. Some may include equipment or infrastructure; others may exclude leases or off-balance-sheet commitments. Do not add them into a single total without reconciling their definitions.
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