Investors are hungry for a piece of the US data centers powering the artificial intelligence boom, and a handful of initial public offerings expected in 2025 would feed that appetite.
CoreWeave Inc., which operated 28 data centers globally at the end of 2024, is one of the industry players expected to launch its IPO early this year, eyeing a valuation of more than $23 billion. The cloud-computing provider is backed by tech giants like Nvidia Corp. and Cisco Systems Inc.
Northern Data AG, which is listed in Frankfurt, is weighing a US listing of a unit that combines its AI and data center businesses. Chinese data center operator Yovole is also exploring a US IPO, according to Bloomberg, as is Las Vegas-based Switch, according to Reuters.
The explosion of interest in AI has sparked a spending spree on data centers to fuel the development of programs like OpenAI’s ChatGPT and Anthropic’s Claude. Blackstone Inc., a major investor in data centers, expects more than $1 trillion will be spent on the US sector over the next five years. Apollo Global Management Inc. sees a more than $2 trillion global opportunity over the same time frame.
Support from the White House adds to the bull case. President Donald Trump unveiled Stargate, a venture that includes some of the biggest US tech companies, and plans to spend $500 billion on AI infrastructure over the next four years. There’s also foreign capital flowing in: Dubai-based billionaire Hussain Sajwani plans to invest $20 billion in US data centers.
While the boom in demand has attracted private capital, most data center operators carry too much leverage to successfully raise money in the public market.
Jeff Ferry, chief executive officer at SJSF Capital, told Bloomberg that a typical data center is seven to 10 times levered, and potentially higher.
“Due to significant need for continued capex spend for new builds and the high leverage associated with these builds, most data center platforms and their investors have chosen to sell assets or the entire company to other larger infrastructure funds rather then go public to get liquidity,” he said. Ferry formerly led investments in data centers at Goldman Sachs Group Inc., where he co-founded its Specialty Lending Group.
Moody’s Ratings expects leverage levels in the sector will likely increase over the next 12 to 18 months and remain elevated as developers engage in an accelerated construction cycle.
Investors are also assessing the potential impact of Chinese AI startup DeepSeek. The application — built much more cheaply than US peers — has raised questions about whether massive investments in data centers are justified. Some landlords in the industry are now worried that their properties could become obsolete. However, some analysts believe DeepSeek’s cheaper AI models will increase demand for digital infrastructure.
“I expect an acceleration in AI usage with a larger number of players to get involved if DeepSeek’s success can be applied or replicated,” Faris Mourad, vice president of Goldman’s US custom baskets team, wrote in a note published on Jan. 31.
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