AI is a transformative technology worth investing in, but investors should be cautious when investing in data centers, according to the head of one of the world’s largest banks.
He told CNBC’s Dan Murphy on Tuesday. HSBC CEO Georges Erhederi said artificial intelligence is a “key enabler for redesigning and rethinking all of our business, all of our activities.”
“A lot of power will be put back in the hands of colleagues because of the level of productivity that will be gained by AI. So this is going to be transformative and we are definitely very far along in its adoption,” he said, adding that AI would help “redesign banks.”
But when it comes to investing in the infrastructure that supports the technology, he advised being more discerning than an all-in approach.
“We have to be selective,” Elhederi said. “You need to consider the quality of your tenancy agreements. You also need to consider the pricing of these agreements. Not all agreements are at a good enough level to be strongly supported. Some may be more difficult.”
HSBC was ranked by S&P Global last year as the world’s seventh-largest bank and Europe’s largest lender, with assets valued at nearly $3 trillion. The London-based bank is both a financier and a data center operator.
In its 2025 annual report, HSBC noted that its customer base spans sectors including the data center and AI sectors, and said it intends to become “a leading bank in the fast-growing migration ecosystem.”
Data center campuses house servers that power AI and cloud computing, which has seen a multibillion-dollar boom in recent years.
According to McKinsey, global spending on data centers could reach $7 trillion by 2030, and Big Tech companies are increasingly turning to private credit and borrowing money to fund the development of their facilities.
But AI borrowing has become a source of tension in financial markets as the cost of capital soars and companies rack up huge debts as they compete to finance AI and data center construction.
Speaking at the LSEG and Eurasia Group GZERO Summit in London earlier this month, Allianz Chief Economic Advisor and former PIMCO CEO Mohamed El-Erian highlighted competition for funding between governments and AI companies as a source of pressure on the bond market.
“The government is not only borrowing what it owes, it is refinancing the debt at higher interest rates,” he said. “(And) you have hyperscalers that raised $200 billion in debt financing last year and will probably raise $1 trillion in debt financing this year. They’re not yield-sensitive. They’re betting on something really transformational, so they’re not spread-sensitive.”
Yields on bonds issued by major economies will reach multi-decade highs in 2026, driven by concerns about rising government deficits and rising debt levels, as well as concerns about persistently high inflation and increasingly hawkish central banks.
JPMorgan Chase & Co. estimated earlier this year that $4.1 trillion in AI-related bonds will be issued by the end of 2010 as data centers and other AI-related companies splurge on capacity-building.
