Big Tech is reportedly sitting on $1.65 trillion in debt that investors can’t see on any balance sheet, and prominent tech critic Ed Zitron calls it “a corporate scandal.”
The figure comes from a Nikkei Asia study of Meta Platforms (NASDAQ:META), Oracle (NYSE:ORCL), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). Combined with the roughly $1.35 trillion the companies officially report, their total obligations may sit around $3 trillion, with more than half of it outside their balance sheets.
Meta’s hidden debt alone is reportedly about $420 billion, nearly triple its recorded debt.
‘This Should Be a Shareholder Riot’
Zitron, author of the “Where’s Your Ed At” newsletter, told the Prof G Markets podcast on Thursday that the story deserves far more attention.
“This should be front page news everywhere,” he said. “This should be a shareholder riot.”
The liabilities stem from data center leases and GPU contracts that accounting rules relegate to footnotes, but only while facilities are under construction or hardware is undelivered. Once the data centers power on, the debt moves onto the balance sheet.
Oracle’s hidden liabilities have grown more than 30-fold in four years to $273.3 billion, per the Nikkei study, as the company builds the Stargate project with OpenAI.
S&P cut Oracle’s credit rating to BBB-, one notch above junk, on July 9, citing the credit risk from its AI infrastructure expansion.
Meta May Not Be Shielded From the Downside
Much of the financing runs through special purpose vehicles. Meta owns just 20% of a Louisiana joint venture with Blue Owl Capital now expected to cost over $50 billion, but Nikkei reported the company has guaranteed to cover investors’ losses if the facility becomes unnecessary and the lease is terminated.
Zitron warned the debt is largely funded by private credit, which is increasingly backed by retirement and insurance money. Michael Burry raised a similar alarm Thursday, questioning how long private equity and credit markets “can hold their breath.”
“If these data centers do not pay out, we have retirement funds and insurance premiums that cannot get paid,” he said.
The Bank for International Settlements has raised similar concerns, warning in March that this “shadow borrowing” could see stalled projects spread AI anxiety through markets.
The Demand Question
By Zitron’s math, the planned buildout would require roughly $1.68 trillion in annual compute revenue to pay for itself, while the global software industry generates less than $800 billion.
