HSBC CEO Urges Selectivity as AI Data Center Borrowing Grows

HSBC CEO Georges Elhedery urged selectivity in data center investing as artificial intelligence fuels borrowing to build facilities, warning that tenant agreements and contract prices can make some deals difficult to support.

“One has to be selective,” Elhedery said in an Oct. 20 interview. He pointed to the quality of agreements with tenants and the prices set in those contracts. Strong demand for AI computing does not mean every project has terms that investors can readily support.

Data centers house the servers used for AI and cloud services. Major technology companies are increasingly turning to private credit and debt to fund construction. Elhedery’s caution focuses on the deals behind that expansion: who has agreed to use a facility and what they have agreed to pay.

HSBC is a London-based bank that finances and operates data centers. Elhedery also described AI as a way to improve productivity and reshape the bank’s operations. His enthusiasm for using the technology came with a more qualified view of investing in the facilities that support it.

The buildout has implications beyond financing. Demand for electricity, construction, land and equipment linked to AI infrastructure has raised concerns about broader U.S. inflation pressure. Those costs add another dimension to the expansion even as lenders and investors weigh the terms of individual projects.