AI Companies Are Trying to Hide a Staggering Amount of Debt

Post by jxjfjkfmc » Thu, Jul 23, 2026, 3:34 PM UTC

ch4s3 wrote: post #91

Noaidi wrote: post #80

Earlier quoted context omitted.

Rope a doped with cope. Maybe you should buy some $ORCL? https://asia.nikkei.com/business/technology/five-us-tech-gia... "Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks." "Today's AI industry is partly supported by demand…

Retail investors shouldn’t be investing in individual stocks outside of industries they understand well. Following GAAP is the definition of not hiding the obligations.

Post by jxjfjkfmc » Thu, Jul 23, 2026, 3:35 PM UTC

rmah wrote: post #89

skohan wrote: post #50

Earlier quoted context omitted.

If it didn't matter, why would they bother jumping through hoops to keep the debt off their balance sheet? In the run-up to 2008 a big factor in the bubble forming was that poor quality loans were packaged in a way to hide the risk in those investments. I'm not expert enough in finance to know if it's the case now, but we do know that clever accounting to hide debt can lead to the incorrect valuation of assets, poten…

They're not jumping through any hoops, I think they're simply complying with reporting requirements. It's not on their balance sheet because being recorded as strait debt would itself be misleading. My understanding is that these sort of off-balance sheet "debt" is mostly in the form of deal terms that may or may not be expressed at some point in the future. An analogy that comes to mind is when companies used to boo…

Post by guywithahat » Thu, Jul 23, 2026, 3:36 PM UTC

senshan wrote: post #56

As long as this debt does not make it into life insurance and pension funds, we are fine. The trouble is that private credit is taking control of some life insurance companies and off-loads this debt to these. When these fail, it will become everyone's problem. > Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private e…

Post by senshan » Thu, Jul 23, 2026, 3:38 PM UTC

mint5 wrote: post #102

senshan wrote: post #93

Earlier quoted context omitted.

For those who stick to a meaningful asset allocation (e.g. 60/40, 80/20, etc), this does not pose significant problem -- they would not be buying much stock in the last 3 years. Instead, they would be buying mostly fixed-income. Probably mostly in 401k/IRA accounts.

But if their debt goes bad, isn’t that debt the very bonds that make up the other part of those asset allocations?

Post by conartist6 » Thu, Jul 23, 2026, 3:39 PM UTC

riffraff wrote: post #90

skohan wrote: post #62

Earlier quoted context omitted.

Couldn't it be a problem given the concentration of the S&P in these companies? At this point these companies make up a huge portion of 401k's for a huge chunk of Americans. How would it affect retirees if they dropped 40-50%, likely taking the market with them?

NVidia makes up 7.5% of the SP500. If it lost 50%, it would be a 3% loss for the index. The concentration is bad, but it would not cause a drop of 50% retirement funds by itself. If you take an all world index, it's even less. Still, if NVidia lost 50% of their market share, we would probably see a big collapse of the stock market. EDIT: to note, the top ten companies in SP500 make up an unprecedented concentration b…