Citi says rising costs and new rules after the US midterms will make data centres dearer and slower to build, but will not end the boom

What changed

Investing.com reports that Citi strategist Steph Choe told clients on 11 November that additional permits, reviews and regulations after the midterm elections could lengthen development timelines, raise costs for tenants and make financing more expensive, but that Citi expects demand for chips, computing power and infrastructure to stay resilient. Citi noted that high-yield bonds issued in 2025 for data centres already completed and powered have sharply outperformed bonds issued in 2026 for projects still under construction, and that high-yield AI spreads are almost 200 basis points wider than non-AI peers. It expects fewer data centre bond sales in the high-yield market next year, with funding moving to other capital markets. Citi's equity research forecasts AI token production growing 236% a year for five years and generative AI rising from 26% of data centre demand in 2026 to about 82% by 2031. These are Citi's forecasts.

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