Tech Giants Conceal $3 Trillion in AI-Related Debt
Big Tech companies are hiding massive amounts of debt in their AI-related spending, with some estimates suggesting that $3 trillion is being kept off balance sheets. This figure is roughly triple what these same companies report as outstanding leases and long-term borrowings on their actual balance sheets.
The majority of this hidden debt comes from purchase commitments and unstarted leases, which accounting rules don't require to be booked as liabilities until the underlying asset or service goes live.
Nine companies, including Microsoft, Alphabet, Meta Platforms, Nvidia, Broadcom, Advanced Micro Devices, Oracle, Amazon, and SpaceX, have been found to have these off-balance-sheet arrangements. The total amount of hidden debt has nearly doubled in just six weeks, from $1.65 trillion in July to $3 trillion.
The largest contributor to this figure is Alphabet, which disclosed $811 billion in purchase commitments and contractual obligations as of June 30, a 152% jump in a single quarter.