AI Companies Are Trying to Hide a Staggering Amount of Debt

In one line

AI companies are pouring tens of billions of dollars into enormous data centers. They’re being built on top of a mountain of hidden debt.

Opening excerpt

AI companies are pouring untold billions of dollars into enormous data centers in their efforts to sustain increasingly complex and resource-intensive AI models.

It’s an extremely costly undertaking built on seemingly bottomless hype — and a mountain of debt. As Japanese financial newspaper Nikkei Asia found in a recent investigation , just five US tech giants — Alphabet, Microsoft, Amazon, Meta, and Oracle — are hiding an estimated $1.65 trillion in debt that doesn’t appear on balance sheets. That’s even more than the $1.35 trillion in debt the five companies officially reported in their financial data for the most recent quarter.

Meta alone has amassed around $420 billion in off-balance-sheet debt, according to Nikkei , highlighting how precarious the AI industry’s steep investment in AI has become, and inspiring comparisons to energy company Enron , which collapsed in spectacular fashion in 2001 because of similar debts hidden behind shell companies.

“The accounting treatment itself is in fashion,” technical accounting consultant Tom Selling told Bloomberg .

(Excerpted from the original; full article via the source link below.)

This story hit the Hacker News front page today (528 points / 253 comments, via futurism.com). Our Tech Radar aggregates daily signals on AI engineering, backend architecture and DevOps — browse the related services and further reading below, or get in touch with our team.