The AI Data Center Blues

Hyperscaler AI data center capex is projected to exceed $700B in FY2026, but mounting ROI concerns and rising leverage (debt/equity issuance) are pressuring margins. Higher costs across GPUs, NAND, DRAM, and electricity are forcing hyperscalers to delay or cancel projects, raising risk to near-term infrastructure spend and returns.

Analysis

Hyperscaler AI data center capex is projected to exceed $700B in FY2026, but mounting ROI concerns and rising leverage (debt/equity issuance) are pressuring margins. Higher costs across GPUs, NAND, DRAM, and electricity are forcing hyperscalers to delay or cancel projects, raising risk to near-term infrastructure spend and returns.