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AI companies are pouring untold billions of dollars into enormous data centers in their efforts to sustain increasingly complex and resource-intensive AI models.<\/p>\n
It\u2019s an extremely costly undertaking built on seemingly bottomless hype \u2014 and a mountain of debt. As Japanese financial newspaper Nikkei Asia found in a recent investigation<\/a>, just five US tech giants \u2014 Alphabet, Microsoft, Amazon, Meta, and Oracle \u2014 are hiding an estimated $1.65 trillion in debt that doesn\u2019t appear on balance sheets. That\u2019s even more than the $1.35 trillion in debt the five companies officially reported in their financial data for the most recent quarter.<\/p>\n Meta alone has amassed around $420 billion in off-balance-sheet debt, according to Nikkei, highlighting how precarious the AI industry\u2019s steep investment in AI has become, and inspiring comparisons to energy company Enron<\/a>, which collapsed in spectacular fashion in 2001 because of similar debts hidden behind shell companies. Like Enron, they\u2019re using special purpose vehicles, or off-balance sheet arrangements such as legally distinct subsidiaries, as a way to make their financial reporting look healthier than it actually is \u2014 often a glaring sign that something is deeply amiss behind the scenes.<\/p>\n \u201cThe accounting treatment itself is in fashion,\u201d technical accounting consultant Tom Selling told Bloomberg<\/a>. \u201cBut what if one of these companies was a house of cards and was propping itself up with this accounting treatment? To me, that\u2019s the risk.\u201d<\/p>\n