The $3 trillion AI datacenter boom is built on “lofty revenue expectations,” projecting the generative AI market to grow from $45bn to $1tn by 2028. But a $1.5tn “speculative” bubble, funded by private credit, is forming around projects with no customers, and a recent MIT study suggests the revenue may never come.
The study found that 95% of organizations are getting zero return from their generative AI pilots. This raises a $1.5tn question: If businesses aren’t seeing value, who will pay for the “speculative assets” being funded by this “shadow banking” debt?
This $1.5tn funding gap is the amount not covered by “healthy” investors like Google and Microsoft. It is being filled by lenders “eager to deploy capital into AI,” who, according to analysts, “may not be properly assessing the risks.” Alibaba’s chair, Joe Tsai, has explicitly warned of a “bubble” in these types of projects.
The Uptime Institute, a datacenter rating agency, agrees, warning that “many” of the announced projects “will never be built” or will only be “populated partially.” These are the “unproven” assets that could trigger a financial contagion.
If the 95% “zero return” statistic holds, and these speculative datacenters fail to find customers, the $1.5tn in private debt behind them could default. This “influx of debt capital,” analysts warn, “could end up representing structural risk to the overall global economy.”