The $1.65 Trillion AI Shadow Debt*
Tech giants are reviving the off-balance-sheet financial engineering behind Enron and 2008 to finance the AI boom—a dangerous gamble given that tech accounts for nearly 40% of the S&P 500. In the 1990s, it was the Special Purpose Entity (SPE); in 2008, the Collateralized Debt Obligation (CDO). Today, it’s the Special Purpose Vehicle (SPV). A Nikkei Asia investigation highlighted by tech analyst Ed Zitron revealed a staggering reality: five major tech giants hold an estimated $1.65 trillion in off-balance-sheet AI commitments—exceeding their combined reported debt of $1.35 trillion. How the SPV Loophole Works Building AI infrastructure is eye-wateringly expensive. When Oracle used traditional bonds to fund its expansion, credit rating agencies soured on its outlook. To avoid credit downgrades, Hyperscalers (Meta, Microsoft, Amazon, Google) and cloud providers (like CoreWeave) are turning to private credit: -The Setup: A tech giant creates an independent LLC (an SPV) to...