Morgan Stanley sees $2.9 trillion in data center spending, and a $1.5 trillion hole

Morgan Stanley expects global data center capital expenditures to reach approximately $2.9 trillion from 2025 to 2028. The driver is no surprise: artificial intelligence, and the enormous physical footprint it requires. The more interesting number is what comes after the total. By the bank’s math, the biggest tech companies can only pay for about half of it themselves, which leaves a financing gap estimated at $1.5 trillion. Where the $2.9 trillion goes Morgan Stanley’s forecast splits the spending into two buckets. Around $1.6 trillion is expected to go toward IT hardware, meaning chips and servers. The remaining $1.3 trillion is earmarked for physical infrastructure and construction. The hyperscalers carry the heaviest load. Amazon, Microsoft, Alphabet, Meta, and Oracle are projected to self-fund about $1.4 trillion through their own cash flows. Subtract the self-funded portion from the total and you land on the estimated $1.5 trillion external financing gap. Private credit steps into the gap Morgan Stanley’s research suggests private credit markets are anticipated to contribute roughly $800 billion of the shortfall. The vehicle of choice is asset-specific structures, where loans...