Growing investment in artificial intelligence (AI) infrastructure is putting pressure on credit markets, with investors scrutinising the risks associated with financing data centre projects, according to a Goldman Sachs research report.
High-yield bonds issued by data centre companies are facing pressure as investors assess whether credit markets can sustain the rapid expansion of AI infrastructure. The report highlighted concerns over project financing, construction costs and companies’ ability to repay debt.
“We have seen significant moves across the market as investors debate whether credit can continue financing the AI build-out,” the report said.
Goldman Sachs said investors should evaluate data centre projects individually rather than assume that all AI infrastructure investments carry similar risks. Amanda Lynam from the firm's credit research team highlighted construction risks, debt repayment capacity, refinancing requirements and claims against tenants as key factors in assessing projects.
Power availability, regulatory approvals and insurance are also critical to determining whether data centre projects are financially viable, the report said.
The concerns come as demand for computing capacity continues to drive investment in data centres and related infrastructure. However, the scale of investment required has raised questions about the ability of companies to secure financing while managing construction and operational risks.
The report also pointed to the implications for equity investors as companies across sectors increase their exposure to data centre infrastructure. Such investments could expose businesses to higher financial risks if projects face delays, cost overruns or difficulties securing power and regulatory clearances.
Goldman Sachs cited Spanish renewable energy company Solaria as an example of the growing overlap between the energy sector and data centre development. The company's announcement of a data centre deal in Uruguay has attracted investor attention.
Goldman Sachs analyst Alberto Gandolfi believes the risks associated with the deal are skewed to the upside. The report also indicated that Solaria could provide further details at its capital markets day in November.
While the expansion of AI infrastructure presents investment opportunities, Goldman Sachs emphasised the need to assess the financial and operational risks of individual projects. The sustainability of the data centre investment boom will depend in part on whether projects can manage costs, secure reliable power supplies, obtain necessary approvals and generate sufficient returns to meet their financing obligations.
