4 ms·

Big Tech uses guarantees to keep $300B AI exposure off balance sheets

38 points by sbulaev 15d ago

andsoitis 15d ago
The headline invites the reader to think these liabilities are concealed from investors, but they're not. Deeper in the article it talks about how credit-rating agencies explicitly includes in their modeling. The guarantee allows lenders to behave partly as though they're lending to NVIDIA, Meta or Broadcom rather than to an AI startup or single-purpose data-center company. The interesting question isn't "Is the debt hidden?" (it isn't), but is who ultimately owns the downside risk of the AI infra boom? More interesting headline would be "Big Tech is using its creditworthiness to finance the AI boom without taking on equivalent amounts of direct debt."
- zerosizedweasle 15d ago
  [dead]
- delfinom 15d ago
  > but is who ultimately owns the downside risk of the AI infra boom? The US taxpayer for the inevitable corporate bailouts.
  - deleted 15d ago
    [deleted]
  - andsoitis 15d ago
    > The US taxpayer for the inevitable corporate bailouts. what informs your prediction?
aurareturn 15d ago
Why are people such big opponents of the AI buildout? I generally don't see many cons to it. 1. Big tech was just using profits to buy back shares before AI build out. Would you rather they buy back shares with their profits or finance the AI build out? 2. If there is an AI bubble, great, when it pops, we'll all have ultra cheap tokens and we'll have all these amazing AI infrastructure built for the next wave of innovation. 3. Even if AI progress stops here and models hit a wall in intelligence, we'll still have AI good enough to solve millennium problems. My theories on why people are so anti-AI: 1. It threatens their jobs. 2. They want AI stocks to drop so they can buy the dip. 3. Their identity is being challenged because AI makes what they do easier.
- alpinisme 15d ago
  People whose retirement funds might be impacted by a bubble burst, or who might lose their jobs (or struggle to get a first/next job) in a post crash economy. You seem to be neglecting the economic impact question and assuming only the ai companies themselves are impacted in a burst.
  - aurareturn 15d ago
    That’s only if they buy in now. If they don’t believe in AI, they wouldn’t buy in now.
    - alpinisme 15d ago
      Large index funds that most people’s portfolio inevitably includes substantially invest in AI-adjacent stocks. Not to mention the fact that bubble bursting is not by any means guaranteed to have its effects limited to one sector.
      - aurareturn 15d ago
        AI is the sole reason why stocks have gone up since 2022.
        alpinisme 15d ago
        That means that all new investment has been in AI (trading in other sectors is a wash). So a bubble burst would sweep up all that growth.
        blactuary 15d ago
        2022-26 is irrelevant for people's retirement savings. They are not or should not be even paying attention to that short-term movement. If the bubble bursts there will be collateral damage that impacts way more than just AI or AI-adjacent companies, and that could have long-term consequences
stefantalpalaru 15d ago
[dead]
peri-cl 15d ago
https://archive.is/a4uct https://archive.is/a4uct

38 points by sbulaev 15d ago

The headline invites the reader to think these liabilities are concealed from investors, but they're not. Deeper in the article it talks about how credit-rating agencies explicitly includes in their modeling. The guarantee allows lenders to behave partly as though they're lending to NVIDIA, Meta or Broadcom rather than to an AI startup or single-purpose data-center company. The interesting question isn't "Is the debt hidden?" (it isn't), but is who ultimately owns the downside risk of the AI infra boom? More interesting headline would be "Big Tech is using its creditworthiness to finance the AI boom without taking on equivalent amounts of direct debt."

zerosizedweasle 15d ago
[dead]
delfinom 15d ago
> but is who ultimately owns the downside risk of the AI infra boom? The US taxpayer for the inevitable corporate bailouts.
- deleted 15d ago
  [deleted]
- andsoitis 15d ago
  > The US taxpayer for the inevitable corporate bailouts. what informs your prediction?

aurareturn 15d ago

Why are people such big opponents of the AI buildout? I generally don't see many cons to it. 1. Big tech was just using profits to buy back shares before AI build out. Would you rather they buy back shares with their profits or finance the AI build out? 2. If there is an AI bubble, great, when it pops, we'll all have ultra cheap tokens and we'll have all these amazing AI infrastructure built for the next wave of innovation. 3. Even if AI progress stops here and models hit a wall in intelligence, we'll still have AI good enough to solve millennium problems. My theories on why people are so anti-AI: 1. It threatens their jobs. 2. They want AI stocks to drop so they can buy the dip. 3. Their identity is being challenged because AI makes what they do easier.

alpinisme 15d ago
People whose retirement funds might be impacted by a bubble burst, or who might lose their jobs (or struggle to get a first/next job) in a post crash economy. You seem to be neglecting the economic impact question and assuming only the ai companies themselves are impacted in a burst.
- aurareturn 15d ago
  That’s only if they buy in now. If they don’t believe in AI, they wouldn’t buy in now.
  - alpinisme 15d ago
    Large index funds that most people’s portfolio inevitably includes substantially invest in AI-adjacent stocks. Not to mention the fact that bubble bursting is not by any means guaranteed to have its effects limited to one sector.
    - aurareturn 15d ago
      AI is the sole reason why stocks have gone up since 2022.
      - alpinisme 15d ago
        That means that all new investment has been in AI (trading in other sectors is a wash). So a bubble burst would sweep up all that growth.
      - blactuary 15d ago
        2022-26 is irrelevant for people's retirement savings. They are not or should not be even paying attention to that short-term movement. If the bubble bursts there will be collateral damage that impacts way more than just AI or AI-adjacent companies, and that could have long-term consequences

stefantalpalaru 15d ago

[dead]

peri-cl 15d ago

https://archive.is/a4uct https://archive.is/a4uct