Data center deals hit record amid AI funding concerns grip investors

Global data centers dealmaking surged to hit another record high this year, driven by a rush to build out the infrastructure required for energy-intensive AI workloads.

That surge came even as investors grew increasingly wary of inflated artificial intelligence valuations and the financing underpinning the rapid expansion of data centers. Global stocks sold off in November as worries of an AI-fueled bubble persisted.

But S&P Global reported that more than $61 billion has flowed into the data center market this year, up slightly from $60.8 billion last year, amid what it called a “global construction frenzy.”

A surge in debt financing contributed to the record high as hyperscalers increasingly tap private equity markets rather than funding the expensive infrastructure themselves.

That trend has sparked concerns from some investors as they question the value of the advanced tech that data centers house.

Shares of cloud company Oracle fell 5% on Wednesday following a report that Blue Owl Capital was pulling out of a deal to back a $10 billion data center in Michigan. Oracle has denied the report, but Broadcom, Nvidia and Advanced Micro Devices retreated after it was published. The Nasdaq Composite lost 1.81% in its worst day in nearly a month.

Iuri Struta, TMT analyst at S&P Global Market Intelligence, said his team expects market concerns around AI and Oracle to be temporary and unlikely to have a “massive impact” on data center buildout and M&A in the near future.

“The competitive dynamic among frontier AI model providers, like OpenAI, Alphabet and Anthropic, is changing quickly, and this can have an impact on investor sentiment in public markets. But overall, we see demand for AI applications continuing to grow strongly in 2026.”

Despite the recent pullback in AI stocks, many analysts remain bullish on the sector. Bank of America said “the AI trade may still have room to run into 2026,” while warning that shares going up does not mean a bubble isn’t forming.

“AI is unstoppable at the moment, but it’s not without any kind of risk,” said Wim Steenbakkers, managing director of ING’s global lead satellite and technology, at a recent press event. He added that with cloud businesses expected to grow at a rate of 20 to 40% per year, data center capacity will need to double every three to four years.

There were more than 100 data center transactions in the first 11 months of the year, whose total value already exceeds all the deals done in 2024, according to S&P Global Market Intelligence data. The majority of those deals took place in the U.S., followed by the Asia-Pacific region.

“In Europe, the buildout of data centers is expected to grow at a lower rate than other regions, but it remains to be seen if this results in an M&A rush amid scarcity of assets,” Struta said.

The pace of growth in the U.S. is leaving Europe “in the dust” according to a recent report from ING which predicted data center investment in the U.S. could be fivefold higher. Growth is…