Five U.S. AI tech corporations have revealed they have $3.2 trillion in debt pinned to speculative AI development. The companies are Alphabet, Meta, Microsoft, Amazon, and Oracle. Most of the debt is tied to Data Center development. The payments for the debt will come before the investments will be able to make money.
Five US Tech Giants’ Hidden AI Debt Hits $3.2 Trillion, Approaching 80% of Total Assets — BigGo Finance– finance.biggo.com
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EXCERPT:
The future debt tied to artificial intelligence (AI) at five US tech giants is ballooning rapidly. According to tallies, the “hidden debt” of Google parent Alphabet, Meta, Microsoft, Amazon and Oracle has reached about $3.2 trillion, equivalent to 80% of the five companies’ combined total assets.
The debt stems mainly from long-term purchase and lease contracts signed to build AI data centers. The tech giants need to procure semiconductors, servers and power from suppliers, and in a tight supply-demand environment they often lock in long-term contracts in advance; they also acquire equipment through leases, or pre-secure computing capacity from emerging cloud providers rather than building data centers themselves. Under accounting rules, unfulfilled purchase contracts and leases that have not yet commenced are not recorded under “debt” on the balance sheet but are disclosed in the notes to the financial statements, and are therefore viewed by the market as “hidden debt”—spending that is highly likely to turn into actual liabilities in the future.
By composition, about 60% of the $3.2 trillion is purchase contracts and 40% is lease contracts. Among the five companies, Alphabet is the largest, at $1.05 trillion as of the end of September. Because of changes in calculation methodology, the figure is not directly comparable with earlier data, but it is about 2.6 times the level at the end of March. Meta, Microsoft, Amazon and Oracle follow.
