- Alphabet, Microsoft, Amazon, Meta, and Oracle have $1.35 trillion in reported debt, but a Nikkei study reveals an additional $1.65 trillion in off-balance-sheet debt, up eightfold in four years.
- The hidden debt uses off-balance-sheet vehicles similar to Enron's, but is now legal due to tighter rules and fuller disclosures, though it echoes Enron's structure.
- Companies package debt for chips, servers, and power into separate legal entities like joint ventures to avoid recording it on their own accounts, e.g., Meta's Hyperion data centre structure with $27 billion debt.
- Examples include Oracle's $260 billion in future lease commitments, Nvidia's $119 billion in purchase obligations, and Alphabet and Microsoft also keeping vehicles off-book.
- The industry is expected to spend over $3 trillion through 2028 on AI data centres, with much financed against chips, but the hidden debt could trigger losses if AI demand fails.
- Off-balance-sheet debts become real when data centres go live, potentially leading to credit rating downgrades (e.g., Oracle's S&P cut) and flagged risks from Moody's and Morgan Stanley.
- The disclosures exist in financial footnotes, but investors see less than half the actual leverage, making it a quiet risk amid bubble talk.