In a massive financial manoeuvre, leading technology corporations have shifted more than US$120 billion in spending for artificial intelligence data centres off their official balance sheets. This strategic move, utilizing special purpose vehicles (SPVs) funded by major Wall Street investors, is intensifying scrutiny over the hidden financial risks embedded in the industry's colossal bet on AI.
The Mechanics of the Multi-Billion Dollar Shield
Companies at the forefront of this trend include Meta Platforms Inc., Elon Musk's xAI, Oracle Corp., and data centre operator CoreWeave. These entities are employing intricate financing deals to insulate themselves from the enormous borrowing traditionally required to build the computing infrastructure powering advanced AI systems. The capital, amounting to at least $120 billion in combined debt and equity, has been supplied by financial heavyweights such as Pimco, BlackRock Inc., Apollo Global Management, Blue Owl Capital, and U.S. banks including JPMorgan & Chase Co., according to a Financial Times analysis.
This money is funneled through special purpose holding companies, or SPVs. A senior executive from a major financing institution noted the dramatic shift, stating, "Eighteen months ago this would have been unfathomable, and fast forward to today, it’s very much the norm." The executive added that the tech industry's strong credit profile allows it to access significantly more capital than any other sector.
Case Study: Meta's Landmark $30 Billion Deal
A prime example is Meta's landmark deal completed in October. The social media giant arranged a US$30 billion private credit agreement for its proposed Hyperion data centre facility in Louisiana. This transaction created an SPV named Beignet Investor in partnership with New York financing firm Blue Owl Capital.
The structure allowed the SPV to raise the full $30 billion, with approximately $27 billion coming from loans provided by Pimco, BlackRock, Apollo, and others, and $3 billion in equity from Blue Owl. Crucially, this enabled Meta to effectively borrow the enormous sum without any of the debt appearing on its own balance sheet. This financial engineering reportedly made it easier for Meta to raise an additional $30 billion in the corporate bond market just a few weeks later.
Risks and Ramifications for the Financial System
While this creative financing protects companies' pristine credit ratings and improves key financial metrics, it raises significant concerns. Analysts warn that the rush of off-balance-sheet financings may be obscuring the true risks these tech groups are undertaking. A critical question looms: who will ultimately be liable if the explosive demand for AI computing power fails to meet expectations?
The use of SPV structures introduces a new layer of systemic danger. Financial stress for AI operators in the future could now cascade across Wall Street in unpredictable ways, as the risk is dispersed among a web of institutional investors rather than being concentrated on the tech companies' own books. This binds the fate of Wall Street directly to the boom-or-bust cycle of the AI revolution, creating a potentially volatile linkage between high finance and technological speculation.
This trend marks a departure for Silicon Valley, where giants have traditionally been cash-rich and low-debt, earning them excellent credit ratings. However, the intense race to secure computing power for the next generation of AI has pushed these same groups to seek unprecedented levels of capital. As firms like Oracle pioneer large debt deals through third parties to fund commitments—such as leasing data centre capacity to OpenAI—the financial architecture supporting the AI boom grows more complex and interconnected, setting the stage for significant consequences across global markets.
