Data Centres in an AI Era: Strong Demand but Adaptability Required

Artificial Intelligence (AI) has taken the technology world by storm following the sensational release of the ChatGPT app for public beta testing. We believe that AI will drive strong, long-term demand for both new and existing data centres, reinforcing their already critical role in the digital economy. The role of data centres as essential digital infrastructure has underpinned significant debt and equity financing activities in data centres in recent years as investors capitalize on their stable cash flows. However, AI has very different demands for power, cooling, and connectivity than current general purpose, video streaming, or cloud computing systems. Some industry observers view this as potentially leading to a significant redefinition of data centre networks, locations, and functionality. While AI represents a very significant opportunity, capitalizing on this trend will require data centres to adapt to changing requirements. Data centres that fail to do this may find their use limited to older applications and the key underpinnings of their credit quality decrease over time.