Remember how they used, "Special Purpose Vehicles," to conceal the extant of their debts?
AI firms are using the same tactic to conceal their debt.
This ain't going to end well.
Tech companies have moved more than $120bn of data centre spending off their balance sheets using special purpose vehicles funded by Wall Street investors, adding to concerns about the financial risks of their huge bet on artificial intelligence.
Meta, Elon Musk’s xAI, Oracle and data centre operator CoreWeave have led the way on complex financing deals to shield their companies from the large borrowing needed to build AI data centres.
Financial institutions including Pimco, BlackRock, Apollo, Blue Owl Capital and US banks such as JPMorgan have supplied at least $120bn in debt and equity for these tech groups’ computing infrastructure, according to a Financial Times analysis.
That money is channelled through special purpose holding companies known as SPVs. The rush of financings, which do not show up on the tech companies’ balance sheets, may be obscuring the risks that these groups are running — and who will be on the hook if AI demand disappoints.
History is rhyming again.
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