Warning of AI credit risks, Moody’s: The off-balance-sheet liabilities of the five major US giants have increased eightfold in three years, soaring to $2.8 trillion
Five major U.S. technology giants have accumulated enormous off-balance-sheet liabilities to support the expansion of artificial intelligence infrastructure, and their credit risk is being closely monitored by rating agencies.
According to a Moody’s rating report, Amazon, Microsoft, Google, Meta, and Oracle together carry about $2.8 trillion in AI-related off-balance-sheet obligations, including lease agreements, purchase commitments, and guarantees, none of which are recorded on their balance sheets.
This figure has seen explosive growth compared to $350 billion in 2023, reflecting how these companies are racing to invest in infrastructure amid the AI boom.
Moody’s analysts David Gonzales and Alastair Drake pointed out in the report, "What’s noteworthy isn’t just the absolute figure, but also the speed at which these commitments are increasing each quarter."
The five companies are also among the most active issuers in this year’s U.S. investment grade corporate bond market. Moody’s emphasized that analyzing these off-balance-sheet commitments is critical for evaluating their credit profiles.
Three types of liabilities see significant surge, data center leases surpass $1 trillion
Structurally, all three types of off-balance-sheet obligations have risen sharply.
Leases for data centers not yet built exceeded $1 trillion this year, a jump of more than 50% from $662 billion last year; purchase commitments—contracts for future purchases of goods or services—rose sharply from $528 billion to $1.57 trillion; and guarantees increased from $51 billion to $137 billion.
Moody’s noted that these five companies follow current U.S. accounting standards in their bookkeeping, and since these obligations are not yet actual liabilities, they do not have to be included on the balance sheet. In addition, not all commitments will ultimately translate into actual cash outflows.
Off-balance-sheet commitments now a risk signal
Nevertheless, Moody’s report stressed that the rapid expansion of these off-balance-sheet obligations reveals the financing pressures facing tech giants in AI infrastructure development.
As demand for data centers continues to surge, these companies are competing to expand their computing power layout, leading to ever-growing long-term financial commitments.
For investors, this trend means traditional balance sheets alone are no longer sufficient to fully assess the actual financial exposure of these companies.
Moody’s report suggests that when analyzing the debt-repaying ability and credit quality of these massive cloud and AI platform players, off-balance-sheet commitments have become a crucial variable that cannot be ignored.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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