In our paper at the start of 2026 on AI data center financing (AI Data Center Boom), we noted that power supply constraints could become the next bottleneck.
Here, we explore the credit market implications as that prediction materializes.
Key takeaways:
- For much of the last two years, investors have focused on the first bottleneck of the AI era: compute. The launch of ChatGPT in November 2022 triggered an unprecedented buildout of AI infrastructure. Demand for semiconductors, data centers, networking equipment and cloud capacity surged.
- The focus is moving from compute to powering the compute: today, attention is shifting to AI-era power demand. However, physical supply constraints and regulatory approval delays could constrain the scale of capital required to meet utility financing needs.
- The financing of AI infrastructure: a prolonged utility financing cycle would have implications not only for utility credit spreads, but also for broader investment grade market technicals. For fixed income investors, active issuer selection will be key.
