The AI-driven datacenter construction frenzy shows no signs of slowing, but neither do concerns that the whole edifice could collapse under the weight of its own hype and mounting investment demands.
Moody's 2026 Outlook report on the global datacenter market, seen by The Register, forecasts business as usual, with demand for server farm capacity continuing to rise in support of AI, cloud computing, and internet services.
The financial services biz estimates at least $3 trillion in investment is required to keep pace with the projected level of capacity expansion between now and the end of the decade. This covers the cost of buildings, the IT infrastructure, and the power required to keep the lights on.
However, the report flags worries over power grid constraints and construction bottlenecks, warning that demonstrating actual revenue generation will become "increasingly important in the AI ecosystem" to silence growing chatter about an "AI bubble."
Question marks over sustainability are hardly new. McKinsey & Company warned in May 2025 that huge sums are being invested in AI on demand forecasts amounting to little more than educated guesswork.
MIT researchers claimed 95 percent of enterprise organizations had seen no return from their AI efforts so far, and Moody's itself says circular deals involving companies like OpenAI and Microsoft are spooking investors.
Capital spending by six hyperscalers in the US – Microsoft, Amazon, Alphabet, Oracle, Meta, and CoreWeave – approached $400 billion in 2025 and is on track to hit $500 billion in 2026, then $600 billion in 2027. A chart in Moody's report shows total global investment peaking in 2029, before declining in 2030.
New datacenter development faces growing headwinds, primarily access to power in most markets, with utilities and power generators hard pressed to meet unexpected electricity demand surges.
Moody's also notes that local opposition to new builds has increased in some markets, often due to public concerns about their consumption of electricity and water, plus the impact on utility bills.
However, regions with "supportive laws" will continue to attract development, with some governments tweaking regulatory frameworks to encourage AI datacenters. The UK announced "AI Growth Zones" with streamlined planning processes last year.
As the risks mount, developers are coming under growing pressure from clients to shorten construction schedules so that hyperscale tenants can add new capacity as soon as possible.
But this collides with issues including high demand for skilled labor, building materials, and essential equipment, driving up construction costs.
Some tenants are now willing to shoulder delivery risks they previously avoided, including exempting power and utilities availability from completion requirements, the report claims.
On those circular deals, Moody's notes that OpenAI has signed sizeable contracts for gigawatts of new datacenter capacity and other assets while attempting to grow its revenue base.
Most financing for these assets relies on long-term leases with hyperscalers like Microsoft or Oracle, but "OpenAI's growing presence in the AI ecosystem poses a growing credit risk depending on its success," the report states.
OpenAI suffered a net loss of $11.5 billion or more during the quarter to September 30, 2025, as The Register reported. ®
Source: The register