Investors are dumping data centre bonds as AI spending frenzy triggers fears of the biggest bubble in history

Fund manager James Harries warns the AI buildout has created probably the greatest capital expenditure cycle the world has ever seen — and that when so much money is deployed so fast, a large amount will inevitably be misallocated. Investors are now losing confidence that AI revenues will prove sufficient to cover the vast debt piles financing data centres, with Anthropic carrying a junk credit rating despite reporting quarterly revenue up nearly 50% to $16.8bn. Harries believes markets are nearing the end of their exuberance and argues quality income-focused strategies may be best placed to weather the coming correction.

Data centre bonds are being dumped by investors as AI borrowers face what analysts are calling a 'Darwin moment'.

Harries says US tech giants have flipped from raking in cash to raising huge sums to splurge, putting household wealth at heightened risk.