As the AI build-out matures, financing is shifting from construction to the chips themselves, which can exceed 50% of a data center's cost. Creative solutions are emerging, such as financing backed by the value of the chips or the compute contracts they service, moving beyond traditional loans.
As AI drives down prices in many industries, assets that cannot be easily devalued by it will become relatively more valuable. This includes not just land and metals, but also unique human content and experiences, which consumers will seek out as an alternative to what they perceive as 'AI slop'.
The current 30-35% drop in software multiples, driven by uncertainty about AI's impact on business models and competition, is historically analogous to the market fear during the shift to cloud computing a decade ago. This suggests the sell-off may be an overreaction to 'peak uncertainty' rather than a permanent impairment.
Hyperscalers can self-fund half of the estimated $3 trillion AI data center build-out, but the remaining gap requires fixed-income markets. Private credit, particularly asset-based financing (Private Credit 2.0), is playing a leading role, moving beyond traditional middle-market lending to fill this need.