Sign Up

Private Credit, Public Risk: AI Is Eating The Debt Market

After a post-pandemic recovery that heavily leaned on consumer spending, the last two quarters have seen a flip. Corporate spending is now leading the charge, owing to relentless investments in artificial intelligence.

According to Goldman Sachs, global power demand from data centers is expected to increase by 50% by 2027, driving significant spending and potentially formalizing AI-dedicated data centers as a new class of infrastructure.

Datacenter Arms Race

Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), and Meta (NASDAQ:META) alone are expected to shell out over $200 billion in combined capital expenditures this year. Much of it is going into AI-related investments like data centers, custom silicon, and software infrastructure. This isn’t incremental; it’s a macro force. As JPMorgan noted, "The Fifth Industrial Revolution will be driven by the continued evolution of AI."

Meanwhile, traditional consumer spending has begun to plateau. Durable goods consumption is down, and excess savings from pandemic stimulus have been largely depleted. That change means the U.S. economy's recent resilience isn't coming from your average Joe buying TVs—it's from mega-corporations buying teraflops.

Employment in data center construction is surging, and suppliers, ranging from chipmakers to power utilities, are scrambling to keep up. Even GDP numbers are feeling the impact. Gross domestic product jumped 3% for the second quarter, far ...