AI Data Center Borrowing Costs Rise as Treasury Yields Hit Multiyear Highs

Treasury yields have climbed to their highest levels since 2007, according to CNBC, pushing up the cost of borrowing for the data center companies funding the artificial intelligence buildout.

The 10-year Treasury yield sat near 5.17% this week, CNBC reported, up about 1 percentage point since the start of the year.

JPMorgan Chase estimated in June that AI-related companies will issue $4.1 trillion in debt through 2030 to keep pace with demand for AI computing capacity, CNBC reported.

Data center operators had already committed to more than $200 billion in new infrastructure spending through 2027, according to techbuzz.ai, largely funded through debt issued when rates were far lower.

Borrowing Gets More Expensive

Corporate bond yields have risen alongside Treasury rates, techbuzz.ai reported, making new debt sales far costlier for capital-intensive data center projects.

The 10-year Treasury yield's climb has shifted the math for borrowers who locked in cheaper financing just a year or two ago.

Techbuzz.ai reported that a project financed at 3% interest looks very different at 6% to 7%. On a $1 billion data center, that gap adds tens of millions of dollars a year in interest payments, the outlet reported.

Investors Split on Risk

Markets have not panicked. CoreWeave shares rose almost 8% this week, CNBC reported, even as the company carries heavy debt tied to its data center expansion.

Oracle has fared worse. Its stock fell 7% for the week and is down roughly 30% for the year, CNBC reported, despite the company's reliance on debt markets to fund AI capacity.

Projects Delayed, Financing Structures Shift

Several planned data center projects have been delayed or scaled back as companies reassess financing options, techbuzz.ai reported. Digital Realty Trust and Equinix have been issuing bonds at a record pace to fund AI-focused expansions, according to techbuzz.ai.

Demand has not slowed. OpenAI, Microsoft and Google continue expanding their computing needs quickly, techbuzz.ai reported, even as capital gets harder to secure on favorable terms.

Some operators are turning to equity partnerships and joint ventures instead of traditional debt, techbuzz.ai reported.

Amazon Web Services and Microsoft Azure have shown more willingness to sign long-term capacity agreements that help data center operators line up financing, though those deals often carry less favorable terms than straight debt.

Techbuzz.ai reported that Nvidia's order timing could also shift as customers grow more cautious about large capital commitments.