JP Morgan: Data center construction is currently in an expansion wave, with an estimated AI financing demand of over $5 trillion in the next 5 years.

JP Morgan recently released a research report stating that artificial intelligence (AI) super large-scale data center operators are aggressively expanding to build data centers, with an estimated financing demand of at least $5 trillion in the next 5 years, possibly reaching up to $7 trillion; of which, around $1.5 trillion investment-grade bonds issuance will be needed, as well as extensive financing from various sectors in the market. Analysts predict that next year, $300 billion of high-grade bonds will be used for building artificial intelligence data centers. This could account for nearly one-fifth of the total issuance in the market. According to media reports, analysts at the bank stated that leveraged financing is expected to provide about $150 billion in funding over the next 5 years. Even with financing from investment-grade and high-yield bond markets, as well as up to $40 billion in data center securitization financing annually, it is still not enough to meet the demand. They estimate that private credit and government can help fill the remaining $1.4 trillion funding gap. Analysts wrote in the report that JP Morgan estimates the financing demand to be at least $5 trillion, possibly reaching up to $7 trillion, will drive the bond and syndicated loan markets to accelerate growth once again. JP Morgan points out that in the next 5 years, the largest source of funds is expected to come from the super large-scale data center operators themselves, with these companies currently having a net operating income of $700 billion, of which $500 billion will be used for capital expenditures.