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Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

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Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#21

Post by mattoxic »

walrus01 wrote: post #8
darth_avocado wrote: post #3

Well technically they don’t own the debt, the SPVs that own the data centers do. The giants just have long term commitments, but if shit hits the fan, it’s not the tech giants but the banks that lent the money to the SPVs that are at risk. This usually means all of us are on the hook.

If I owe the bank $750,000 and can't pay, it's my problem. If I owe the bank $1,750,000,000 and can't pay, it's the bank's problem.

As Australian failed rich guy /scumbag Alan Bond said... if you owe 30k you have problems, if you owe them 30 million they take you to lunch. Or words to that effect

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#22

Post by lelanthran »

bayarearefugee wrote: post #20
al_borland wrote: post #15

Earlier quoted context omitted.

I don’t know if the public would be as accepting of a bailout for AI companies… trillion dollar businesses that pushed technology with the goal of eliminating 50% of white collar workers… that isn’t really mission critical. If they want the reward, they need to accept the risk when the bet doesn’t go their way. If they aren’t willing to accept that, they shouldn’t be making such big bets.

> I don’t know if the public would be as accepting of a bailout for AI companies That's putting it mildly, IMO. An AI bailout would be a poison pill that would electorally doom whichever party was behind it for decades.

> An AI bailout would be a poison pill that would electorally doom whichever party was behind it for decades.

One could only hope. In any case, in the short term, with AI having such a poor public-image story, if the Dems want to get back into power again they'd do everything they can to assure their voters that a bailout is not on the cards.

This is the first single-issue voter concern that has really popular support, and they'd be dumb for chasing identity politics again.

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#24

Post by richardw »

King-Aaron wrote: post #13

These debts mean nothing if the US government actually views AI technology as being on par with the Manhattan project. They'll just bail them out or nationalise them.

If the US companies need trillions to barely beat Chinese companies spending billions, despite a multi year head start...

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#25

Post by rapind »

bayarearefugee wrote: post #20
al_borland wrote: post #15

Earlier quoted context omitted.

I don’t know if the public would be as accepting of a bailout for AI companies… trillion dollar businesses that pushed technology with the goal of eliminating 50% of white collar workers… that isn’t really mission critical. If they want the reward, they need to accept the risk when the bet doesn’t go their way. If they aren’t willing to accept that, they shouldn’t be making such big bets.

> I don’t know if the public would be as accepting of a bailout for AI companies That's putting it mildly, IMO. An AI bailout would be a poison pill that would electorally doom whichever party was behind it for decades.

What if they are already doomed and just looting?

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#26

Post by charcircuit »

al_borland wrote: post #15
walrus01 wrote: post #11

Earlier quoted context omitted.

2008 all over again, but instead of Washington Mutual and Countrywide, we have whatever the heck is going on now.

I don’t know if the public would be as accepting of a bailout for AI companies… trillion dollar businesses that pushed technology with the goal of eliminating 50% of white collar workers… that isn’t really mission critical. If they want the reward, they need to accept the risk when the bet doesn’t go their way. If they aren’t willing to accept that, they shouldn’t be making such big bets.

Society is already being rewarded from the investments AI companies have made. These investments have created something so valuable that society is paying billions of dollars for the product they are making. Even without access to the raw weights, the option of being able to pay for access to these models has tremendous value to society that can not be ignored.

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#27

Post by Aurornis »

walrus01 wrote: post #8
darth_avocado wrote: post #3

Well technically they don’t own the debt, the SPVs that own the data centers do. The giants just have long term commitments, but if shit hits the fan, it’s not the tech giants but the banks that lent the money to the SPVs that are at risk. This usually means all of us are on the hook.

If I owe the bank $750,000 and can't pay, it's my problem. If I owe the bank $1,750,000,000 and can't pay, it's the bank's problem.

If you are a collection of 5 companies with annual net income in the hundreds of billions of dollars, the debt is actually still their problem.

Everyone likes to repeat this tired cliche but skips all of the steps that would have to happen to get to that point.

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#28

Post by miohtama »

mNovak wrote: post #6

On the one hand, these debts may be off the balance sheet, but institutional investors certainly know about them and can reason about the company's valuation. Retail investors may be caught out slightly more. But on the other hand, these companies are essentially paying for the service of taking the debt off books (by paying the leasing premium to the SPV partners). I guess I'm wondering what they really gain from do…

It's mostly for having lower debt-to-equity and higher equity multiplier (better stock price). And you retain your credit rating and can get cheaper debt.

But of course it is obvious in this scale. However, credit ratings do not care, as they are driven by regulation, and regulators get their paycheck regardless.

Also in the joint venture like Blueowl/Meta for the $27B Hyperion data center in the case when things go wrong Meta is in theory bankrupt remote. So in theory it should not affect credit rating because when the bad debt is not served, Blueowl, not Meta, is in the hook for it. And Meta's investors should be protected for this event.

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#29

Post by [deleted] »

AznHisoka wrote: post #4
darth_avocado wrote: post #3

Well technically they don’t own the debt, the SPVs that own the data centers do. The giants just have long term commitments, but if shit hits the fan, it’s not the tech giants but the banks that lent the money to the SPVs that are at risk. This usually means all of us are on the hook.

As someone who belongs to “all of us”, i vote to not bail us out if shit hits the fan. No need to ask me when it happens, OK? No really, it’s nice of you but we really dont need to be bailed out. You are welcome :)

[deleted]

Re: Five US tech giants' hidden debts soar to $1.65T on opaque AI funding

#30

Post by WoodenChair »

King-Aaron wrote: post #13

These debts mean nothing if the US government actually views AI technology as being on par with the Manhattan project. They'll just bail them out or nationalise them.

> These debts mean nothing if the US government actually views AI technology as being on par with the Manhattan project. They'll just bail them out or nationalise them.

According to Wikipedia, the Manhattan project only cost $28 billion in 2024 dollars. That's a completely different order of magnitude compared to what we're talking about here. I imagine the size of the investment here would even be hard for the US government to swallow.

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