Key Takeaways
- • Morgan Stanley forecasts $2.9 trillion in global AI-driven data center spending from 2025 to 2028, but expects the largest technology companies to cover only about half through their own cash flows.
- • The projected $1.5 trillion financing gap is expected to be filled in large part by private credit, which Morgan Stanley estimates could supply roughly $800 billion through asset-specific loans.
- • Morgan Stanley allocates about $1.6 trillion to IT hardware, including chips and servers, and $1.3 trillion to physical infrastructure and construction.
- • Amazon, Microsoft, Alphabet, Meta and Oracle are projected to contribute about $1.4 trillion from their own cash flows.
- • The US data center power deficit is forecast to reach 32 to 33 gigawatts by 2028, a physical constraint beyond the financing gap.
Summary
Morgan Stanley forecasts $2.9 trillion in global data center spending driven by artificial intelligence between 2025 and 2028, according to the primary source, The Cryptonomist. The firm projects that the largest technology companies will fund only about half of this buildout through their own cash flows, leaving an estimated $1.5 trillion financing gap. Amazon, Microsoft, Alphabet, Meta and Oracle are projected to contribute roughly $1.4 trillion from internal cash flows.
Morgan Stanley allocates about $1.6 trillion of the spending to IT hardware, including chips and servers, and $1.3 trillion to physical infrastructure and construction. The research suggests private credit markets could supply approximately $800 billion of the shortfall through asset-specific structures, meaning loans secured against particular facilities or equipment rather than a borrower's overall balance sheet. Such arrangements already appear in financing for independent computing providers, where lenders take graphics processing units and customer software contracts as collateral. Banks also finance physical construction by arranging and syndicating project loans. The research points to potentially higher yields from asset-specific private credit than from conventional corporate debt.
Hyperscaler lease commitments total more than $1.2 trillion in undiscounted future payments, and these support much of the construction lending behind the buildout. Nvidia has also participated in discussions about backstop guarantees of up to $250 billion to support data center debt financing, per the article.
Separately, the US data center power shortfall is forecast to increase to 32 to 33 gigawatts by 2028. This physical constraint sits alongside the financing gap, and the investment forecast and power projection share the same 2028 endpoint.
Morgan Stanley allocates about $1.6 trillion of the spending to IT hardware, including chips and servers, and $1.3 trillion to physical infrastructure and construction. The research suggests private credit markets could supply approximately $800 billion of the shortfall through asset-specific structures, meaning loans secured against particular facilities or equipment rather than a borrower's overall balance sheet. Such arrangements already appear in financing for independent computing providers, where lenders take graphics processing units and customer software contracts as collateral. Banks also finance physical construction by arranging and syndicating project loans. The research points to potentially higher yields from asset-specific private credit than from conventional corporate debt.
Hyperscaler lease commitments total more than $1.2 trillion in undiscounted future payments, and these support much of the construction lending behind the buildout. Nvidia has also participated in discussions about backstop guarantees of up to $250 billion to support data center debt financing, per the article.
Separately, the US data center power shortfall is forecast to increase to 32 to 33 gigawatts by 2028. This physical constraint sits alongside the financing gap, and the investment forecast and power projection share the same 2028 endpoint.
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