Shares of GE Vernova, Vertiv, and Bloom Energy dropped between 10% and 24% over the past week. Investors are concerned about the sustainability of AI infrastructure spending amid rising inflation and higher borrowing costs. The broader AI power and infrastructure sector has seen a median decline of 23% since early October.
Financial pressure is mounting due to concerns over CoreWeave, which carries an estimated debt of $35-50 billion. By mid-October, its bonds traded at yields of 15-16.5%. Market participants are questioning how companies will fund costly data center projects if credit conditions tighten and refinancing becomes more expensive.
Despite market volatility, these companies reported significant growth in recent quarters. GE Vernova saw third-quarter orders rise 96% to $29 billion, with a backlog of $197 billion. Vertiv posted $4.3 billion in sales, a 61% increase, while Bloom Energy reported sales growth of 138%.
Future project development faces additional risks from potential policy shifts. The upcoming US midterm elections create uncertainty regarding permitting for new data centers, with states like Texas under scrutiny. Analysts warn that approximately $1 trillion in data center debt will need to be refinanced, increasing the risk of project delays.
