Australian AI infrastructure boom shows signs of cooling as funding pressures build
Macquarie strategists say the AI investment cycle is entering a harder phase as developers lean on outside funding while borrowing costs stay high, with the collapsed Firmus listing cited as a warning sign.
Australia's AI infrastructure boom is showing signs of slowing, according to a report published on 21 October 2026, as investors become warier of data centre valuations, higher borrowing costs and the large sums needed to build proposed projects. Macquarie strategists say the global AI investment cycle is moving into a tougher stage, because developers rely more on external funding while interest rates and credit costs stay high.
The report treats the failed Firmus sharemarket listing as one of the clearest Australian warning signs. It also notes growing uncertainty over how fast other large data centre projects can lock in finance, electricity and construction capacity.
Spending tied to AI is still huge, but investors are increasingly asking when the hundreds of billions of dollars going into computing infrastructure will deliver lasting returns. Chips are only part of the bill: developers also need generation, transmission lines, cooling, land, fibre and long-term customer contracts, and these can lift costs considerably. The report names electricity supply as among the main constraints in Australia, with Sydney singled out because grid operators have cautioned that spare transmission capacity there is shrinking.
The report says the slowdown does not necessarily spell the end of the boom. It describes investors moving away from backing nearly any AI-linked expansion plan and towards requiring projects to show workable funding and realistic returns. For Australian investors, it says, this could alter which sectors gain most, with reliable infrastructure, utilities and existing data centre capacity potentially outperforming speculative developers that still need substantial outside capital.