Smaller firms take on debt for AI-driven data center

A significant shift is underway in how data centers for AI projects are being financed, with smaller companies increasingly turning to debt rather than relying on the large cash reserves that tech giants traditionally used. This new reliance on borrowing — often in the form of convertible notes or large-scale loans from private lenders and banks — is fueling rapid expansion but raising concerns among analysts. They warn that if projected AI revenues fail to materialize, the debt from these projects could exceed $1 trillion by 2028, echoing past financial bubbles in the tech sector.