**Data Center Dealmaking Hits Record High as AI Fuels Infrastructure Boom**
The global data center market has witnessed a record-breaking year for dealmaking, propelled by an insatiable demand for the robust infrastructure required to power energy-intensive artificial intelligence workloads. This surge occurred even as investors grappled with soaring AI valuations and the substantial financing required for the rapid expansion of data center facilities. Global equities experienced a notable sell-off in November, underscoring persistent concerns about an AI-driven market bubble.
Despite these market jitters, S&P Global reported that over $61 billion has been invested in the data center sector this year, a slight increase from the $60.8 billion recorded last year, amidst what is described as a “global construction frenzy.”
A significant driver of this record activity has been the increased reliance on debt financing. Hyperscale operators are increasingly turning to private equity markets to fund the development of expensive infrastructure, rather than shouldering the entire cost themselves. This trend has raised questions among some investors regarding the long-term valuation of the advanced technologies housed within these data centers.
Recent market movements reflect some of these concerns. Shares of Oracle experienced a 5% decline following reports that Blue Owl Capital was withdrawing from a $10 billion data center financing deal in Michigan. While Oracle has refuted these reports, the sentiment extended to other major tech players, with Broadcom, Nvidia, and Advanced Micro Devices also seeing retreats. The Nasdaq Composite, a bellwether for tech stocks, closed down 1.81% in its worst day in nearly a month.
However, analysts remain largely optimistic about the sector’s long-term prospects. Iuri Struta, a TMT analyst at S&P Global Market Intelligence, believes that current market concerns surrounding AI and specific company performance are likely to be temporary and will not significantly impede data center build-out and mergers and acquisitions in the near future.
“The competitive dynamic among frontier AI model providers, such as OpenAI, Alphabet, and Anthropic, is evolving rapidly, which can influence investor sentiment in public markets. Nevertheless, we anticipate continued strong growth in demand for AI applications throughout 2026,” Struta commented.
Even with the recent pullback in AI-related stocks, many industry observers maintain a bullish outlook. ING forecasts sustained healthy investment levels in 2026, driven by ongoing AI advancements and growing public and private sector support for digital innovation.
Wim Steenbakkers, global head of datacenters and technology at ING, noted the dual nature of AI development. “There are two sides to the development of AI: one that fosters optimism, such as accelerated breakthroughs in medicine, and at the same time, concerns typically arise around public safety,” he told CNBC. “Consequently, uncertainty persists regarding the monetization of the technology and its underlying business models. The high levels of investment will only be validated in the future as these uncertainties diminish and the applications and advantages of AI become clearer.”
Data from S&P Global Market Intelligence indicates that over 100 data center transactions occurred in the first eleven months of the year, with their total value surpassing all deals completed in 2024. The majority of these transactions were concentrated in the U.S., followed by the Asia-Pacific region.
“In Europe, the pace of data center build-out is projected to be slower compared to other regions, but it remains to be seen if this will trigger an M&A rush due to asset scarcity,” Struta added.
The rapid growth in the U.S. is leaving Europe behind, according to a recent ING report which projected U.S. data center investment to be potentially five times higher. Growth is also increasingly originating from the Middle East, as wealthy Gulf states aim to establish themselves as future global AI hubs.
**Debt Issuance Nearly Doubles in 2025**
Debt issuance in the data center sector nearly doubled in 2025, reaching $182 billion compared to $92 billion in the previous year, according to S&P data. Meta and Google were among the most active issuers, with Meta alone raising $62 billion in debt since 2022, nearly half of which was issued in 2025. Google and Amazon secured $29 billion and $15 billion, respectively. The report highlights an “unusual arrangement” where hyperscalers are increasingly collaborating with AI labs to acquire assets and finance construction, underscoring the immense capital required to meet escalating demand.
Struta anticipates a more “robust” M&A landscape in the data center sector for 2026. “I wouldn’t be surprised if already high valuations climb even higher,” he stated. “The development of new data centers can be temporarily constrained by energy supply limitations, thus increasing the value of existing facilities. Given the scarcity of large data center companies, we may witness more asset divestitures by corporations that do not consider data centers their core business.”
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