The Risks Behind the Expected $5.3T AI Data Center Funding Boom

17 snips

Jan 25, 2026

Greg Peters, co-CIO for public fixed income at PGIM, a bond-market and credit specialist. He discusses the $5.3 trillion AI data-center financing surge and why much of it may hit bond markets. Short construction loans vs long unsecured hyperscaler debt come up. He highlights winner-take-all risks in hyperscaler buildouts and his top near-term worry: economic overheating.

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INSIGHT

Scale Of The AI Data-Center Finance Wave

The AI data-center buildout requires roughly $5.3 trillion of financing, with about $4 trillion expected to hit the bond market.
Greg Peters warns investors to be careful because this is an eye-popping supply wave that must be absorbed soon.

ADVICE

Prefer Shorter, Collateralized Loans

Favor shorter-tenor, collateralized construction-style financing over long unsecured bonds when lending into data-center builds.
Greg Peters prefers five-year in structures with strong collateral and backstops to mitigate refinancing and technology risks.

INSIGHT

Mismatch Between Debt Tenor And Tech Risk

Hyperscalers have been issuing long-term unsecured investment-grade debt despite high uncertainty about tech and useful-life of racks and chips.
Peters questions issuing 40-year unsecured debt given rapid technology and refinancing unknowns.

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We are knee deep into earnings season, and WSJ’s Take On the Week co-hosts Telis Demos and Miriam Gottfried dive right into what companies they’ll be keeping an eye on this week. Our hosts compare the divergent strategies of Chevron and ExxonMobil as they navigate geopolitical instability in Venezuela and a push for cheap oil from President Trump. Telis and Miriam highlight some rising and and not-so-rising stars in the AI story: Seagate and Meta. Then they look at the return of the “Sell America” trade amid recent policy volatility and tariffs

After the break, Miriam is joined by Greg Peters, co-chief investment officer for public fixed income at PGIM, the asset management business of Prudential Financial, to discuss the risks facing the bond market. Peters explains why the market shrugged off recent concerns over Fed independence. Next, he shares how he hedges the winner-take-all risk in the AI buildout. And finally, Peters shares his biggest concern as an investor over the next year.

This is WSJ’s Take On the Week where co-hosts Telis Demos, Heard on the Street’s banking and money columnist, and Miriam Gottfried, WSJ’s private equity reporter, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead.

Have an idea for a future guest or episode? How can we better help you take on the week? We’d love to hear from you. Email the show at takeontheweek@wsj.com.

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