Technology

Five US tech giants' hidden debts soar to $1.65tn on opaque AI funding

Data center leases, GPU supply contracts raise liabilities at Meta, Oracle, Nikkei study shows

A Meta data center in the state of Georgia. The company's off-balance-sheet debt is about $420 billion, nearly triple its transparent debt. © AP

KOHEI YAMADA

July 21, 2026 02:29 JST

PALO ALTO, California -- Hidden debt at U.S. tech giants swelled eightfold in roughly four years to an estimated $1.65 trillion as artificial intelligence investments ballooned, a Nikkei study shows, exceeding actual debt and making it tougher for investors to assess risk.

Nikkei examined recent financial statements and other materials from Google owner Alphabet, Microsoft, Amazon, Meta and Oracle. The four companies aside from Oracle are scheduled to announce their second quarter earnings from Wednesday, meaning the figures may increase further.

The five companies' hidden debt, which does not appear on balance sheets, totaled $1.65 trillion in the most recent quarter, exceeding the roughly $1.35 trillion in debt reflected on their balance sheets. The data includes some estimates.

Meta's off-balance-sheet debt is particularly high at about $420 billion, nearly triple its recorded debt.

These companies are rapidly bolstering their data centers and other computing resources to power AI development, and are entering into long-term purchase agreements for graphics processing units (GPUs) and servers.

Constructing data centers requires investment in the billions or even tens of billions of dollars. Tech companies often enter into lease agreements with data center operators to keep initial costs down. Some of these are arrangements where the operator provides the land, buildings and power facilities, which the tech company leases over the long term.

Under accounting rules, GPUs and servers under long-term contracts that have not yet been delivered -- as well as lease agreements for data centers that are not yet operational -- are treated as off-balance-sheet items.

Oracle is advancing a large-scale data center project called Stargate with OpenAI, using lease agreements with external operators. Its hidden debt reached $273.3 billion as of the end of May, a more-than 30-fold increase in four years.

Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.

Some in the market have begun to show concern. Morgan Stanley analyzed the matter in detail in an investor report, while rating agency Moody's also pointed out in a February report that commitments for leases yet to begin were ballooning.

Tech companies expect future earnings to exceed these debts. Microsoft, Alphabet and Amazon's publicly disclosed backlogs for cloud services and other businesses totaled roughly $1.45 trillion as of the end of March. Amazon Web Services CEO Matt Garman said his company's investments are "not speculative."

All five companies declined to comment when asked about their increasing hidden debt.

Institutional investors are becoming increasingly involved. Meta formed a joint venture with funds managed by U.S. investment firm Blue Owl Capital to build a massive data center in Louisiana, the total development cost for which was announced in 2025 as $27 billion.

By investing in the data center's operating company with a 20% stake and using the facility under a lease agreement, Meta secured computing resources but also increased its hidden debt.

Meta has a contract guaranteeing investors' losses if the data center becomes unnecessary and the lease is terminated. The company announced on July 13 that its total investment in the facility is now expected to exceed $50 billion.

Tech giants are already relying on issuing corporate bonds and new shares because their investment expenditures are exceeding their earnings. Their fundraising from institutional investors on top of that is leading to overheated capital investment.

In a March report, economists at the Bank for International Settlements referred to the mechanism of raising funds from institutional investors without increasing debt on their balance sheets as "shadow borrowing." They expressed concern about the risk of data center projects stalling and AI anxieties spreading throughout the market.

An executive at a Japanese auditing firm said concerns were growing that the tech companies' "actual financial burden is significantly larger than what can be seen on their balance sheets."

U.S. energy company Enron, though fundamentally different from tech giants, collapsed in 2001 due to off-balance-sheet debt hidden behind multiple shell companies. Even with proper accounting practices, an increase in joint ventures with low transparency could raise concerns in the market.

Much of this hidden debt will eventually be recorded. When data centers start up, the related debt can suddenly become very real, and if AI demand does not grow as expected and utilization rates fall, the data centers' asset values could decline, leading to losses.

Today's AI industry is partly supported by demand generated by circular investment. Nvidia and tech giants invest in data center operators and AI companies, with that money then turning into GPU and cloud usage fees. Actual demand is difficult to see, increasing the likelihood of overinvestment in data centers.

Nikkei Asia