Tech Giants' Debt-Fueled AI Spending Spree Masks Hidden Leverage

The rapid growth of artificial intelligence is fueling an opaque phase in the AI infrastructure race. The world's richest technology companies are increasingly relying on debt to fund their massive spending on data centers, chips, and computing capacity.

According to Robin Wigglesworth, author and editor of the FT Alphaville, official balance sheets no longer tell the full story. Companies like Alphabet Inc., Meta Platforms Inc., Microsoft Corporation, and Amazon.com Inc. appear healthy due to their cash flows, large cash balances, and modest reported leverage.

However, Wigglesworth reveals that these companies are using complex structures to keep debt off their balance sheets. For example, Meta formed a joint venture with Blue Owl called Beignet, took a 20% stake, and guaranteed a 20-year lease on the facility. This structure allowed Beignet to issue $27 billion in bonds while keeping the debt off Meta's balance sheet.

The hidden AI balance sheet is massive, with hyperscalers carrying about $1.5 trillion in lease commitments. Goldman Sachs estimates that roughly $1 trillion of these leases have not yet commenced and are therefore not recognized as conventional liabilities under U.S. accounting rules.