Big Tech Finances AI Infrastructure with Off-Balance Sheet Debt
A The Financial Times report uncovers a key financial strategy in the race for artificial intelligence. Giants like Meta, xAI, Oracle, and CoreWeave are accumulating massive debt to build infrastructure, but keeping it hidden from their official financial statements through special legal structures. 🏗️
The Mechanism of Special Purpose Vehicles (SPVs)
The tactic involves creating Special Purpose Vehicles (SPVs), separate legal entities that take on the loans needed to erect and equip data centers. This allows companies to protect their balance sheets and key debt metrics while aggressively scaling their capacity to process data for AI. The global operation exceeds 120 billion dollars.
Main financial players backing the bet:- Major investment managers like Pimco, BlackRock, and Apollo provide capital and debt.
- Banks such as JPMorgan are actively participating in the financing.
- Firms like Blue Owl Capital are also injecting resources into these vehicles.
This model transfers financial risk from tech companies to investment funds, enabling rapid expansion without deteriorating their own credit rating.
Concerns Among Regulators and Experts
The strategy is beginning to raise doubts about the stability of the financial system. By hiding the true magnitude of the liability, it becomes difficult to assess the true solvency of these companies. Regulators are watching warily, as this scenario evokes past crises where risk, being off-balance sheet, was not perceived in time. 📉
Key risks identified:- The expectation bubble around AI could deflate, leaving underlying assets devalued.
- The debt doesn't disappear, it's just accounted for elsewhere, creating a distorted image of corporate health.
- It repeats a historical cycle, now with servers and algorithms as collateral.
A Debt Cycle with New Protagonists
It seems the lesson that debt doesn't vanish but hides is repeating itself. The technological race to dominate artificial intelligence is being financed with a mechanism that masks the real leverage. While tech companies accelerate, systemic risk could be accumulating on the balance sheets of investment funds, away from direct scrutiny. The current episode updates old dangers for the data era. ⚠️