The energy gap

Take a look at the chart below. Morgan Stanley estimates the US data center capacity shortfall will grow from 15 GW in 2026 to 43 GW in 2028. Demand rises from 97 GW to 180 GW, while supply only reaches 137 GW.

So what does it cost to close that gap?

A 1 GW AI-optimized campus runs roughly $35-40B all-in (Epoch AI puts it near $38B). About 60% of that is servers and GPUs, not concrete. Land and grid hookups are under 1%.

$40B x 43 GW = ~$1.7 trillion

That is the order of magnitude of capital needed just to close the 2028 gap, on top of what is already committed.

Where does the money come from?

→ Hyperscaler operating cash flow, which is increasingly not enough on its own

→ Record investment-grade bond issuance

→ Private credit and infrastructure funds financing campuses directly

→ Leases and joint ventures that move capex off the balance sheet

The market consequences:

Credit: a heavy supply of long-dated paper from the same issuers, and growing exposure to a single theme.

Equity: free cash flow compressed by capex, and depreciation rising fast as servers age out in 5-6 years. Returns depend on utilization staying high.

The shortfall is real, but filling it is a financing story as much as an energy one. The key question is who ends up holding the risk if demand growth slows before the assets are paid off.

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