AI investment boom pushes hidden debt of US tech giants to $1.65 trillion

The AI investment boom is rapidly increasing the hidden debt of US tech giants. According to a survey by Nikkei, the off-balance-sheet debt of Google's parent Alphabet, Microsoft, Amazon, Meta, and Oracle has grown 8 times in about 4 years, reaching an estimated $1.65 trillion. That's more than their $1.35 trillion in on-balance-sheet debt. Meta's hidden debt is about $420 billion, nearly 3 times its reported debt.

To fuel AI development, these companies are building massive data centers, buying more computing power, and signing long-term contracts for GPUs and servers. But under current accounting rules, these future costs don't show up on their balance sheets until delivery or operation starts, making it hard for investors to see the real risks. Oracle's hidden debt has jumped over 30 times in 4 years to $273.3 billion.

Tech firms believe future revenue will cover these debts. As of March, Microsoft, Alphabet, and Amazon reported total orders of about $1.45 trillion. But their spending already exceeds profits, so they're raising money through bonds and stock sales. Combined with institutional investor funds, AI infrastructure investment is showing signs of overheating. The Bank for International Settlements warns that if data center projects stall, market concerns could spread quickly.