Cracks are appearing in a U.S. artificial intelligence infrastructure boom estimated at $10 trillion. As rising interest rates and a weakening bond market shake neocloud companies that lease and operate AI data centers, infrastructure firms are also struggling to raise funds.
The Financial Times reported on the 18th, citing data from regulatory intelligence provider Reglayer, that at least 47 large data center projects have been delayed, withdrawn or blocked from approval this year. Reglayer described the figure as a "conservative estimate" covering only the largest projects.
The FT added that its own research found more than 1,000 communities across the United States attempted to impose moratoriums or other restrictions on AI infrastructure construction this year. Earlier this month, investment bank Bernstein estimated that only about 35% of planned data center projects in the United States are viable.
More than three years into the AI boom, data center construction plans are running into practical obstacles.
Deteriorating funding conditions have been a major factor. Cash shortages at neocloud companies are squeezing infrastructure investors as well. Shares of CoreWeave, which leases data centers, fell 23.6% last week. One of its corporate bonds is trading at distressed levels. Anthropic is weighing whether to cancel a $45 billion contract with British neocloud provider Nscale.
Stijn Van Nieuwerburgh, a professor at Columbia Business School, estimated in a Brookings Institution paper that U.S. AI infrastructure spending will reach $10.3 trillion between 2025 and 2032, equivalent to 3.6% of gross domestic product annually. That is about 1.5 times the peak of the 19th-century railroad boom and more than three times the internet boom.
He warned that the enormous debt load is "all hidden off balance sheet" and that "a 10% decline in cash flow could wipe out equity value." Separately, tech outlet The Information, citing executives in the data center and neocloud industries, reported that the hundreds of neoclouds operating today will consolidate to roughly seven to 10 within a few years.
The outlet noted that even if companies such as CoreWeave collapse, the impact on construction itself would be limited because facilities can easily find new tenants, but that trouble at firms building facilities directly, such as Nebius, IREN and Nscale, would place a heavier burden on Nvidia.
David Driggers, chief executive of Cirrascale, an early neocloud operator, predicted that "consolidation is clearly going to happen," adding that "asset managers or telecom and fiber-optic companies could step in to acquire."