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Five US tech giants' hidden debts soar to $1.65T on opaque AI funding
https://archive.ph/20260720174223/https://asia.nikkei.com/business/technology/five-us-tech-giants-hidden-debts-soar-to-1.65tn-on-opaque-ai-funding https://archive.ph/20260720174223/https://asia.nikkei.com/bu...
- mNovak 2mo agoArchive link: https://archive.ph/20260720174223/https://asia.nikkei.com/business/technology/five-us-tech-giants-hidden-debts-soar-to-1.65tn-on-opaque-ai-funding https://archive.ph/20260720174223/https://asia.nikkei.com/bu...
- bmenrigh 2mo agoI'm in the US and I'm either getting NXDOMAIN or NOERROR (with no A record answer) back from every big nameserver I try (my ISP, Google, Cloudflare, etc.). But a dig +trace archive.ph (which recurses all the way to the root locally) resolves it fine. Is there some US-mandated DNS filtering I don't know about?
- Shank 2mo agoHmm, does DoH work?
- bmenrigh 2mo agoA pretty reasonable question. I guess it could be my ISP filtering. Or rather could have been, since the issue seems like it was transient. I'm now getting resolutions. Very strange, I wish I'd recorded what was going on better while it was broken.
- r721 2mo agoYou could try using archive.today to see where it would redirect you (some other archive TLDs are less filtered depending on ISP, and I believe .today autoselects the best one for your IP).
- arcfour 2mo agoNo, the archive.today (and .ph, .is, etc.) operator configured their nameservers to return invalid responses to Cloudflare's 1.1.1.1 resolvers because Cloudflare doesn't forward EDNS client subnet info (for the privacy of their users). The operator claims to need this information for load-balancing but I don't buy that argument. As far as I was aware, their issue was resolved, but sometimes I still see failures so I don't really know. Also, "US-mandated DNS filtering" would be a violation of the 1A except in narrow circumstances (which don't exist here) so I'm not sure that that should be your first thought...
- darth_avocado 2mo agoWell 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.
- VirusNewbie 2mo agohow are these long term commitments structured? Can the big companies default on them? pay a small penalty? I think that probably makes a large difference.
- mgh2 2mo agoLet all these greedy AI giants go down
- AznHisoka 2mo agoAs 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 :)
- spaceman_2020 2mo agoReplace you with AI, and when the AI math falls apart, use your tax money to bail out AI And they’ll get away with it too
- mNovak 2mo agoOn 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 doing so, if again sophisticated investors can see through the games?
- wwind123 2mo agoI think it's just a common practice to do it this way in the industry. May not mean these companies are intentionally hiding something at this point of time.
- miohtama 2mo agoIt'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.
- salemh 2mo ago[dead]
- dvh 2mo agoTo quote the Big short: "I have five houses and a condo."
- King-Aaron 2mo agoThese 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.
- tchalla 2mo agoThe advantages of being a reserve currency and then also blaming your peer competitors as “manipulators”.
- elictronic 2mo agoChina is a currency manipulator who steals patents and ideas from other countries. The US uses the reserve currency as it's most beneficial soft power. The Petrodollar is the clearest example of this by a large margin. Both are true.
- tchalla 2mo agoThe US also stole patens and ideas from other countries. So did Germany and Italy and pretty much every other country on this planet. Yeah, it is true that the US doesn't like a challenger here and when someone doesn't play by the rules that they want to set, they get upset. Everything is true, yes.
- oblio 2mo agoThey can only do that if AI is profitable or at break even. Otherwise they would need to finance these companies yearly.
- dandanua 2mo agoIn other words, the US gov will simply put all the debt onto the public, as usual.
- richardw 2mo agoIf the US companies need trillions to barely beat Chinese companies spending billions, despite a multi year head start...
- andrewstuart 2mo agoPretty sure Tim Apple can flip open his wallet and pick up the tab for everyone, if he’s feeling generous.
- roschdal 2mo agoImagine shorting Alphabet stock now , just before the AI bubble bursts, what an opportunity of a lifetime.
- hnarn 2mo agoGo ahead.
- simianwords 2mo ago[flagged]
- littlecranky67 2mo agoFinally I could afford to buy a gaming rig again.
- Terr_ 2mo agoGood luck timing it. "The market can remain irrational longer than you can remain solvent." There isn't always a mechanism that will translate being-right about some fundamental fact into making-money from it. P.S. It isn't trivially "solved" by someone setting up a gambling scheme either. Many people who are right will still lose because they didn't also guess when other people would start to agree with the conclusion. Plus there's the time-value of money for things which take longer to play out.
- glimshe 2mo agoShorting is a very different thing from buying a stock and living through a drawdown. You can bleed money fast and if you don't have options protecting your trade, your loss potential is unlimited. Once you pay for the insurance through options, the profits aren't that attractive unless you can see the future and predict exactly when the stocks will go down.
- ndsipa_pomu 2mo agoIsn't Oracle more likely to collapse first? However, timing these things is next to impossible, so good luck if you attempt shorting them.
- ur-whale 2mo agohttps://archive.ph/lOlv5 https://archive.ph/lOlv5
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- ItsBob 2mo agoIt's hard not to be fatalistic about all of this now: In my mind, it's crystal clear that the investments will never be paid back. The revenue streams from all the companies involved don't add up. It must fail at this point. That means losses. Big losses for some. I assume that these off-the-books companies can quite literally be pinched off and the debt becomes the banks' problem, so the primary company, i.e. Meta, Oracle, can walk away but the banks will be left holding the bag. We know what happened the last time the banks played their stupid games!
- walrus01 2mo agoFor anyone old enough to remember attending bankruptcy/liquidation auctions of "dotcom 1.0" companies in 2000, 2001 or so and buying an Aeron chair, or similar, I really wonder what it will look like this time around. There was one point in time where only very slightly used datacenter cooling systems and diesel backup generators were selling for pennies on the dollar.
- ItsBob 2mo agoYou'll be able to buy used H100s. One careful owner. Never overclocked etc. They'll be knackered though, unlike a good Herman Miller chair. :-) We might even be able to afford RAM again!
- walrus01 2mo agoUnlike 2001, I'm also trying to imagine amateurs (or very small companies) trying to repurpose pieces of whole-rack liquid cooling systems, with varying degrees of possible success or catastrophe. But I'll be holding out for the gently used one owner B300.
- Gareth321 2mo agoIMHO I think the blast radius is implicitly contained. The major investments are in data centres, and the current investment cases impute near zero residual value after five years. Meaning that current valuations already assume "catastrophic" declines in equipment valuation. This is unusually clear-eyed and sober investment calculus in the tech space. Further, unlike during the dotcom crisis, most of this spending is not driven by debt. It's mostly funded by the large companies which are producing enormous revenue and profit to pay for this. It's an order of magnitude different. The major question mark on these valuations is the revenue assumptions, which can be reasonably criticised. A bear case here is that revenue growth is not as aggressive as projected, and valuations steadily decline over time. I don't see a likely scenario where the entire sector collapses. There is no apparent cascade failure mechanism. Of course, these mechanisms aren't always immediately clear prior to crashes. We must remember that all of the models coming out of China are presumed to be distilled frontier models. Meaning a) they will always be x days/weeks/months behind the frontier models, b) they will never be quite as good, c) inference will generally be constrained by compute capacity (especially as the frontier studios have an incentive to capitalise on their moat), meaning Chinese studios will always be at a disadvantage. The real wildcard here is self-improvements. It looks like we're already in the singularity, meaning a large proportion of LLM development is already done by LLMs. The development cycle on these might be months now, but it will be weeks soon. Days within a year, then hours, minutes, seconds, and milliseconds. It's impossible to predict what this curve looks like.
- m101 2mo agoThe banks are not the ones on the hook here - they no longer lend in a meaningful way as first loss lender on many things. If they lend they do so as a senior financing provider to vehicles that provide the financing. The actual lending is done by private credit institutions that have raised money, sometimes on the order of 10s of billions of $.
- gilfyole 2mo agoA bubble in progress waiting for right time (hello 2028) to burst.
- 4ggr0 2mo agowhy do you consider 2028 to be the right time for a pop?
- dofm 2mo agoI personally think it could pop before then if there is not concerted effort to stop inflating it and maybe start to let the air out. But the main reason 2028 would be a risky year is the systemic risks around Trump. If he makes even more efforts to put his thumb on the electoral scales than he already has, or if it is not clear there will be a free and fair election (from an external perspective it really isn’t), then confidence drains out of the wider system very quickly, and one of the earliest things to go in such a situation is speculative investment. Even if there is a free and non-controversial election, the market might well see risks for the AI companies: would the Democrats, if they make it into power, be so fully on board with letting these companies operate in a low-regulation environment? And if the bubble should look like bursting for its own reasons in early 2028, will the by then quite stressed federal government, late in the term, actually have the real authority to do anything about it? It’s not a popular government, or a very organised one, and whatever they do will need confidence, co-ordination and an unprecedented level of buy-in
- Freedumbs 2mo agobecause the maga regime operates this way. they make short term policies to inflate the economy that aren't sustainable while in power, then deadlock congress so the time bomb policies are locked in. it's the same play every time, but now insanely brazen as rules only sort of matter sometimes depending on the actor. gop has always wrecked the economy. this is true nationally, state and local levels. the evidence is there if anyone cares to learn. yes all politicians are corrupt. yes, most democrats are also corrupt. that means the system should be reformed to reign in campaign finance. and also prosecute all the criminals. we can't time travel to undo the mistakes, but we can start fixing them today. imprison the traitors.
- NoboruWataya 2mo ago"hidden" debts and "opaque" funding I seem to read about every other day.
- blitzar 2mo agothey should bring back the listicle - it was more honest than the pretend investigation format
- moezd 2mo agoThat doesn't sound good, but out of curiosity: How do you exactly hide debt? Circular economy is easy to understand, but what else is cooking?
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- alwaysanoobie 2mo agoOh man,this makes my stomach churn with anxiety. It's a tough job market out there and it took 4 months to land job offers after being laid off. I have a competitive offer from Oracle OCI with a team adjacent to this initiative and I am seriously considering it. How long do you guys think it will take to blow up (if it does) To the experienced devs out there; would you take a 15% less offer from a medium sized company for job security?
- actionfromafar 2mo agoSomething other than Oracle for only 15% less? Sounds great.
- mohamedsayhii 2mo agodefinitely
- blitzar 2mo agoFrom the "Read Next" section: SoftBank's Son says calling AI a bubble is 'blasphemy' Softbank always has their finger on the hype pulse ... I will go against the grain of everyone else - be a hype beast, every crash I have seen they make more and get better jobs on the flip side. Counter Oracle at a higher salary and ask about bonus guarantees for when this all goes to the moon (you have to really really appear to believe).
- alwaysanoobie 2mo agoThe 15% delta is after negotiations. They didn't allow quarterly vests either.
- blitzar 2mo agoTake what you have learnt from a layoff (assuming it is your first time) - we are all one big happy family in it together till we are not, then we are all mercenaries and it is onto the next master. Time to get back in the game.
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- dizhn 2mo agoThe whole world's wealth is being siphoned off by these companies. I hope the very probable crash does not happen.
- ndsipa_pomu 2mo agoWhat would be the alternative scenario to a crash? As I understand it, for AI companies to not crash, they have to end up putting us all out of jobs which will end up with us becoming slaves/serfs.
- zamadatix 2mo agoWhy keep slaves or serfs if AI can do every job better.
- braebo 2mo agoEgo fodder!
- ndsipa_pomu 2mo agoSlaves/serfs can do physical things and they're cheaper than AI.
- dizhn 2mo agoI don't know who gave them that Utopian end goal but they could just settle slowly into a useful function. They didn't have to inflate so much as to make a crash almost inevitable.
- ndsipa_pomu 2mo ago“Once men turned their thinking over to machines in the hope that this would set them free. But that only permitted other men with machines to enslave them.” Frank Herbert, Dune
- rvz 2mo agoThe 5 horse men of the AIpocalypse. But this reminds me of 2008. Because when it goes all wrong, the US government is just going to bail them out just like they did with the banks to just keep the scam going. Because after all, they will be treated as "too big to fail".
- waterTanuki 2mo agoSo this is why Masayoshi Son was lashing out at critics recently.
- baxuz 2mo agoTime to update https://isaiprofitable.com/ https://isaiprofitable.com/