AI data centre funding surges to record $35 billion

Australian data centre operators have raised a record of at least $35 billion so far this year, as the rapid build out of AI infrastructure becomes an increasingly important part of the country's business investment growth.

A new Reserve Bank staff note obtained exclusively by the ABC shows funding obtained by Australian-focused operators has already surpassed the $24 billion raised across all of 2025, an increase of 46 per cent.

The analysis covers Airtrunk, CDC, Firmus, Goodman, Macquarie Technology and subsidiaries of Stack Infrastructure and Equinix. It draws on financing across syndicated lending, bonds, public and private equity as well as some private transactions.

This year's funding is also more than seven times the annual average recorded between 2020 and 2024, highlighting the breakneck speed at which financing for the sector has accelerated.

However, the rapid growth is coming off a low base.

Data centre operators still account for only 16 per cent of funding raised by Australian "non-financial corporates" across the markets captured by the analysis.

The author of the note, RBA analyst Bradley Speed, states the $35 billion figure was conservative because the data does not capture all single-bank loans and may also miss some private transactions.

This research marks the first time an analyst from the RBA has estimated how much money has been raised to build Australian data centres.

Why the RBA is watching

One reason the note examines data centre financing is because the amount of capital being raised can provide early indications of how much more construction is coming.

The note said funding could provide a "useful leading indicator for data centre investment in Australia", because local operators tend to rely on external capital to fund large construction programs.

This comes as the RBA grapples with how to respond to the AI investment boom, which is contributing to Australia's high inflation problem.

Building data centres requires huge amounts of spending on construction, electrical infrastructure and skilled labour, as well as imported equipment such as advanced chips and servers.

As the data centre boom increases demand for workers and resources in an already stretched construction sector, it means those resources could, relatively speaking, become more expensive and add to inflationary pressures elsewhere in the economy.

Governor Michele Bullock said on Tuesday that while AI investment was already adding to demand, there were "very few signs yet" that it was boosting the economy's supply capacity.

"So we've got this sort of awkward sequencing event at the moment where, in Australia at least, we are in a situation of excess demand and the AI boom is adding to that demand ahead of any potential supply impacts that it might have going forward," she said.

The governor also said central banks globally were watching the risk of an AI investment bubble and the potential consequences if it unwound in a disorderly way.

"You know, it might not be a bubble, but it might be."

The RBA's August meeting minutes showed the board had discussed the possibility of the AI and data centre investment boom becoming larger than anticipated, which runs the risk of driving inflation higher.

Mostly borrowed money

The RBA analyst note shows the boom is being financed overwhelmingly through borrowing money.

Debt accounted for 85 per cent of new funding obtained by Australian data centre operators so far in 2026, slightly above estimates of 60 to 80 per cent in the United States.

The biggest source has been syndicated lending, in which a group of lenders combines to provide a single, often large, loan.

Syndicated loans can be attractive for data centre build out because it "allows for greater loan sizes than with a single bank" and is generally "more accessible than the corporate bond market for firms without an investment grade rating".

About $25 billion has been raised through this method this year, accounting for about three-quarters of data centre financing in both 2025 and 2026 to date.

The RBA staff note also says the sector is particularly suited to debt financing because operators often secure long-term customer leases, providing relatively predictable cash flows, while real estate can be used as collateral.

Australian operators have made less use of bonds than their US counterparts, although the note says funding sources could become more diverse as the sector expands.

Is the boom squeezing out other borrowers?

The second issue examined in the note is whether the rapid growth in AI-related fundraising could begin to crowd out financing for other Australian companies.

That concern has become more prominent overseas, particularly in the United States, where the scale of investment in AI infrastructure has prompted concerns that heavy borrowing by tech firms could crowd out other borrowers.

That is happening against a broader backdrop of rising borrowing costs globally.

The benchmark US 10-year Treasury yield climbed above 5 per cent recently, reaching its highest level since 2007.

Heavy AI-related borrowing is increasing demand for capital, but it is only one factor, among a number, behind higher long-term borrowing costs.

But the note finds little evidence that similar pressures are emerging in Australia so far.

Despite the rapid growth in data centre financing, it remains small relative to Australia's broader funding markets.

The note says there is little evidence the sector has materially affected financing conditions for other Australian borrowers.