$1.65 trillion in "shadow" debt: Big Tech's AI race hides colossal risks for investors
The five largest technology corporations — Alphabet, Microsoft, Amazon, Meta, and Oracle — have accumulated hidden debt obligations totaling a staggering $1.65 trillion. These figures are not reflected in their official balance sheets, creating an illusion of financial stability. The reality, however, is that the sector's cash flow is rapidly dwindling amid unprecedented capital expenditures.
According to my analysis, these "shadow" loans (a term already used by the Bank for International Settlements) represent liabilities from long-term contracts for leasing GPUs, data centers, and participation in joint ventures. Current accounting rules do not classify them as debt until the facilities are operational. This creates a distorted picture for investors, who see only the official debt of $1.35 trillion, unaware of the hidden burden.
Who is "hiding" how much?
The distribution of hidden debt is highly uneven. Meta (recognized as an extremist organization in Russia) has "hidden" $420 billion — three times its official debt. Oracle's liabilities have grown 30-fold over four years. Meanwhile, all five companies have declined to comment, only heightening suspicions of a systemic problem.
Analysts warn that the real threat will emerge when data centers go online. Once the facilities start generating revenue, the leases will land on the companies' balance sheets, and financial reports will change dramatically. In the worst-case scenario — with weak demand for AI — losses from asset impairment will fall on investors and insurers who financed construction through private credit and project bonds, unaware of the full scale of risks.
Cash flow: from $191 billion to a deficit
Bank of America has already warned of a liquidity crisis. The free cash flow of the largest data center operators will drop from $191 billion in 2025 to $19 billion in 2026, and turn negative by approximately $26 billion in 2027. This is a direct consequence of record AI capital expenditures: the five corporations' spending has already exceeded $725 billion in 2026, and the sector's debt issuance will reach around $175 billion — six times the average over the past five years.
Paradoxically, the long-term forecast paints the opposite picture. Alphabet, Meta, Microsoft, and Amazon could increase their combined free cash flow nearly tenfold — to roughly $650 billion by 2030. But this optimism is based on the assumption that the AI monopoly will prove itself, and these companies will become an essential link for all AI users, earning revenue from every query.
My conclusion: Big Tech is making a colossal bet on the future, sacrificing current liquidity and hiding real risks. If AI demand meets expectations, the winner will be the one that owns its own infrastructure. But if the market cools, the "hidden" trillions will hit investors who were unaware of the full size of the bet. This is a classic "make or break" scenario, where the cost of a mistake could be catastrophic.