America’s $10tn AI infrastructure boom is starting to fray
A vast bet on the future of the technology is running into the unforgiving economics of the physical world
George Hammond and Ryan McMorrow in San Francisco, Kieran Smith in London and Eva Xiao in New York
© Joe Lamberti/BloombergCracks are appearing in America’s debt-laden $10tn AI infrastructure boom as project delays, public backlash and shaky investor confidence bring a reckoning for the data centre build-out underpinning the US economy.
A rush for computing power in recent years created what multiple people involved characterised as a “Wild West” market.
They said money has flooded into brand-new companies and due diligence for new projects has been expedited, with AI labs such as Anthropic and OpenAI accepting higher short-term costs to move as fast as possible.
More than three years into the AI boom, these ambitious data centre plans are running into reality.
At least 47 large projects have been delayed, withdrawn or blocked in 2026, according to data shared by RegLayer, a regulatory intelligence company, which described it as a “conservative estimate” focused on the largest sites.
Analysts at Bernstein this month estimated only about 35 per cent of the planned US data centre pipeline was credible.
More than 1,000 communities across the US have tried to introduce moratoria or other restrictions on AI infrastructure this year, according to FT research.
AI labs and Big Tech groups have committed to spend trillions of dollars over the coming years on computing capacity, or “compute”.
But those massive rewards can only be realised if a group of recently launched “neocloud” data centre providers first manage to finance the unprecedented construction effort.
Higher interest rates and a souring bond market are now threatening their ambitions, and with them the AI build-out, said a number of people involved in the market.
This week investors began repricing risks in the sector: debt tied to many AI infrastructure groups, including upstart cloud provider CoreWeave, sold off sharply and share prices for listed companies slumped.
CoreWeave’s stock lost almost 25 per cent during the week.
Higher borrowing costs and rising inflation have added to mounting questions about whether the revenues of leading labs such as Anthropic and OpenAI will be sufficient to cover the costs.
Plans by a procession of new developers and cloud providers including SoftBank’s SB Energy and Nvidia-backed Firmus to go public have been delayed or mothballed, with OpenAI’s decision to delay its own initial public offering further damping sentiment.
Construction delays also raise the prospect that tenants, typically Big Tech companies or AI labs, could invoke clauses letting them walk away if projects are not delivered on time.
High-profile projects have faced lengthening timelines, with setbacks affecting several Oracle sites being built for OpenAI’s Stargate data centre initiative.
Former crypto miners such as TeraWulf and Cipher have also renegotiated leases and slightly lengthened delivery schedules on projects for Anthropic in recent months, in part because of design changes from the AI lab and its partner Fluidstack.
The adjustments can be costly.
When amending its lease with Fluidstack at a Texas site last month, Cipher secured more time to deliver and agreed to absorb the first $359mn of cost overruns.
The changes required roughly $750mn of additional equity, partly funded this week by an $850mn convertible bond.
Anthropic can also walk away from its $45bn deal with Nscale, a London-headquartered neocloud launched in 2024, if the group does not hit financing or delivery timelines for a major project in West Virginia.
The Nvidia-backed neocloud is targeting a New York IPO at a $35bn valuation, but bankers say that will be difficult to pull off in the near term given volatile market conditions.
A person familiar with the matter said Nscale hoped to list this year.
Nscale declined to comment.
Nscale had just 25,000 advanced AI chips online in total as of August, compared with the nearly 500,000 it plans to operate.
Jensen Huang, chief executive of Nvidia, was more upbeat on Wednesday in London, telling a crowd that his company had helped build up Nscale in a year’s time.
“Last year you were zero,” he said, pointing to an Nscale executive.
“Look at them now: a proud English start-up, it could be the most valuable UK company created in the last 10 years.”
Confidence in the data centre boom has been underpinned by the growth of OpenAI, Anthropic, Meta, Google and other AI groups.
OpenAI chief executive Sam Altman has staked his company’s future on the effort, claiming “compute is destiny”.
A crop of businesses offering to source land, semiconductors, power and data centres has sprung up in response, capitalising on rampant demand and generous equity and debt markets to scale fast.
AI labs such as Anthropic and OpenAI have reasoned they are better off risking the loss of a portion of their investment by moving fast — even where they rely on inexperienced partners — than suffering a shortfall of computing power that prevents them delivering their models, according to people with knowledge of the matter.
They have also structured contracts to protect themselves should partners fail to deliver.
An OpenAI spokesperson said the company’s approach balanced “speed, cost and reliability.”
The resulting outlay on AI infrastructure is unprecedented: US spending is projected to surpass $10tn between 2025 and 2032, according to estimates by Stijn van Nieuwerburgh, an economist at Columbia Business School, in a paper for the Brookings Institution.
That equates to about 3.6 per cent of US GDP a year, a far higher proportion than previous infrastructure waves including railways, highways and electrification.
But investors this week have increased their scrutiny of the immense capital needs of America’s AI build-out.
CoreWeave, a small crypto miner four years ago, was among the first to capitalise on the AI boom but has been at the centre of a sell-off as investors fret over its ability to keep financing the billions it will spend on Nvidia hardware and data centre leases.
One of its unsecured bonds sank into distressed territory this week, while bonds funding data centres leased to CoreWeave also slid.
A $1.1bn bond for a site in Virginia has lost about 5 per cent of its value in the three weeks since it priced.
A data centre being built in Saline Michigan for Oracle and OpenAI © Jim West/UCG/Getty Images
SB Energy, majority owned by Masayoshi Son’s SoftBank and backed by OpenAI and Nvidia, has not completed a single data centre, and has $174bn in capital needs in order to satisfy contracts worth $430bn in future revenue, largely from OpenAI. The group has delayed plans for a public listing at a $50bn valuation.
Arkady Volozh, chief executive of another Nvidia-backed neocloud Nebius, told a Citi conference in September that building out its planned 5 gigawatts of capacity would take about $250bn of financing. “So far, we financed maybe 20 per cent of that,” he said.
These financial challenges come on top of the inevitable hurdles facing any large infrastructure project as well as growing public discontent with data centre construction.
OpenAI’s $500bn Stargate infrastructure scheme, which sought to bind Altman’s ambitions in the sector to President Donald Trump’s, has run into a litany of issues including thwarted planning permissions, project delays and the departure of senior executives — including the group’s computing lead Sachin Katti this week.
Securing building permissions has become increasingly difficult across the sector while utility regulators have been refusing grid connections unless projects can supply their own power, according to data centre executives.
“People aren’t just dropping their shorts for data centres anymore,” one executive said. “It’s much harder today to finance a data centre.”
Additional reporting by Tim Bradshaw and Michelle Chan.
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