1.65 trillion hidden bomb! The hidden debts of the five tech giants have skyrocketed eight times in four years. Will the AI arms race trigger the next liquidity crisis?

The crazy "arms race" of the five major tech giants in the United States in artificial intelligence (AI) infrastructure is giving birth to a "hidden debt empire" far exceeding the surface liabilities. A recent analysis of the latest financial report footnotes of Alphabet(GOOGL.US), Microsoft Corporation(MSFT.US), Amazon.com, Inc.(AMZN.US), Meta(META.US), and Oracle Corporation(ORCL.US) shows that the "hidden debt" accumulated by these five companies through long-term procurement commitments, data center leases, and other methods has ballooned to $1.65 trillion, exceeding their officially disclosed liabilities of about $1.35 trillion, and has quadrupled over the past four years. This massive off-balance sheet obligation has raised concerns among Wall Street and global regulatory agencies: if AI demand falls short of expectations, these future payment commitments hidden in footnotes could quickly turn into a "debt bomb" that devours cash flow. Purchasing GPUs on credit plants hidden debt risks The so-called "hidden debt" refers to future payment obligations that companies incur due to investments, equipment purchases, or long-term leases, but under current accounting standards, these obligations may not be recognized as liabilities until the assets or facilities are actually received or completed. They do not immediately consume cash on the balance sheet and do not appear in the main section of balance sheets, but are hidden in small-print footnotes at the end of financial reports. Currently, the global battle for AI dominance is escalating, with tech giants using massive amounts of funds to purchase high-end GPUs in bulk and build large-scale data centers. To avoid a sharp increase in current liabilities, they generally use long-term procurement commitments and post-sale leaseback, long-term lease, and other data center financing models. This operation method legally uses the accounting rule of "recognizing income upon delivery", pushing back heavy capital expenditures layer by layer, but also accumulating a huge off-balance sheet debt mountain. According to statistics, Meta's hidden debt size is the most astonishing among these five companies, estimated at around $420 billion, almost 2.8 times its on-balance sheet liabilities. Meta is co-building a giant data center with Blue Owl Capital(OWL.US) in Louisiana, with the total development cost soaring from the initial announcement of $27 billion to over $50 billion. Meta has only invested 20% in equity, reducing the upfront investment significantly, but it has reportedly agreed to guarantee all losses in case of a break in the partnership - this potential rigid obligation is not reflected on the balance sheet. Oracle Corporation's hidden debt has shown explosive growth, increasing over 30 times in four years to reach $273.3 billion. This burden mainly comes from large-scale leasing arrangements, with a considerable portion of the funds designated for the "Stargate" AI data center project in collaboration with OpenAI. Meanwhile, Microsoft Corporation, Alphabet, and Amazon.com, Inc. have a combined backlog of orders for cloud services and various businesses totaling approximately $1.45 trillion. While this seems to provide support for future revenue, the continuously accumulating forward payment commitments still loom as a shadow overhead. If demand falls short of expectations, the "hidden bomb" will evolve into a liquidity disaster The core concern in the industry is that if global AI demand growth falls short of the high expectations across the industry, these delayed recognized debts will suddenly turn into a real cash flow black hole. Some industry insiders pointed out that commercial real estate leases can retain a significant asset value, but AI data centers are filled with rapidly depreciating semiconductors due to technological advancements. If soft AI demand leads to a downturn in occupancy rates and utilization rates, tech giants will face substantial impairment losses on their assets. Of even greater concern is the current popular "circular investment" model - tech companies invest in each other's AI services to support their reported revenue and demand data in the short term, masking the uncertainty of actual demand. However, once the actual demand growth cannot absorb the massive computing power being built, the delayed debt will explode when the data centers start operation. While tech giants remain optimistic, the explosion of off-balance sheet liabilities is an undeniable fact. The "central bank of central banks" issues a historic warning As the leverage of tech giants builds up on and off the balance sheet, the Bank for International Settlements (BIS), known as the "central bank of central banks," has issued a blunt warning in its latest annual economic report. The BIS directly compares the current trillion-dollar AI investment frenzy to the 19th-century canal frenzy, the British railway bubble, and the 2000 internet bubble, stating that "all these precedents ended with investment reversals that triggered economic downturns." The report estimates that the combined AI-related capital expenditures of the five largest hyperscalers in the United States from 2025 to 2026 will exceed $1 trillion, surpassing what their profits and free cash flow can bear, forcing some companies to borrow to cover the costs. The BIS particularly points out the "complex private transaction networks" hidden behind the scenes: tech giants lock in long-term procurement of their computational power through equity investments in AI labs, and third-party contractors construct data centers, which are then leased back with long-term contracts embedded with exit clauses. These clauses are poorly disclosed and pose a risk of repeated guarantees on the same assets. If expenditures are put on hold, the entire supply chain - from chip manufacturers, infrastructure contractors to private and direct investment funds - will face simultaneous income stream disruptions. With the direct exposure of the lending sector to the AI sector expanding fourfold over five years, coupled with ongoing inflation and conflicts like that of GEO Group Inc, the financial system is likely to experience a more rapid chain correction than the traditional banking crisis. The BIS clearly states in the report: "The scale and speed of the current AI investment frenzy, together with the widespread expectations of a significant productivity boost, are highly reminiscent of the historical precedents mentioned above. The outcome of these precedents, without exception, is a sudden investment reversal, leading to a widespread economic downturn."