With the help of so-called shadow borrowing, large tech companies are trying to keep part of their massive AI investments in data centers or chips off the official balance sheet. Special companies are founded that take out loans to build and operate AI infrastructure.
Because of AI: Tech companies are hiding debt
The tech companies then conclude rental agreements for use. This means you remain debt-free and creditworthy, even at first glance. Obligations such as data center leasing agreements or AI chip purchase agreements do not necessarily have to be shown on the balance sheets. For example, if the projects have not yet been completed or GPUs and servers have not yet been delivered, as Golem writes.
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Industry experts such as the Bank for International Settlements currently consider this shadow credit system to be dangerous. Ultimately, the failure of AI projects or lower-than-expected demand could quickly spread to other parts of the financial system, according to a statement.
$1.65 trillion in shadow debt
A current analysis by the Japanese business magazine Nikkei Asia shows how big the problem has become. According to this, the shadow debts of the five US tech companies Alphabet, Microsoft, Amazon, Meta and Oracle amount to around 1.65 trillion dollars. This corresponds to an eight-fold increase in the past four years.
In addition, there is almost $1.35 trillion in debt, which is officially listed on the tech companies’ respective balance sheets. According to the Nikkei Asia report, the situation is particularly dramatic at Meta. Its hidden debts are said to be around $420 billion. That is almost three times as much as the officially stated liabilities.
These CEOs were kicked out of their own companies
Oracle, in turn, which runs the Stargate AI infrastructure project together with OpenAI, has now accumulated over $270 billion in hidden debt – a thirty-fold increase compared to 2022. At Stargate, the software company is relying on leasing agreements with data center operating companies.
Tech companies are hoping for bubbling AI profits
None of the five tech companies wanted to comment on the shadow debts to Nikkei Asia. However, investment expenses are already exceeding income, so they are dependent on issuing corporate bonds and new shares. In the future, companies expect that AI revenues will bubble up and exceed the debts they have to accept.
