Big Tech’s $300B AI Guarantees Raise Hidden Risk for Investors (NVDA:NASDAQ)
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6 Articles
Technology giants are rapidly expanding the use of collateral to launder debt to AI data centers and chips by issuing up to $300 billion in commitments in less than a year, according to the Financial Times. The movement, according to the journal, occurs at the same time that they record only a small part of this exposure in their balance sheets. Exclusive material for subscribers. To have full access, access the link of the subject and register.
Meta, Nvidia, Broadcom and other technology would have supported hundreds of billions of dollars in debt linked to AI data centers and chips through guarantees and residual value mechanisms.
Major technology companies are increasingly using guarantees to finance the construction of data centers and the purchase of chips needed for artificial intelligence development. In less than a year, they have offered guarantees worth up to $300 billion. However, only a small portion of the related liabilities goes directly to their balance sheets, according to the Financial Times.
Big Tech Uses Corporate Guarantees to Keep $300 Billion of AI Debt Off Its Books
Alphabet's data center guarantees jumped from $16.9 billion to $43.8 billion in six months, with less than 2% hitting its actual balance sheet. The Financial Times reports Big Tech is using guarantees and SPVs to keep roughly $300 billion in AI infrastructure exposure off its books, part of nearly $3 trillion in sector-wide commitments.
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