TechFlow News, February 25: Moody’s Ratings recently released an industry report indicating that five tech giants—Amazon, Meta, Alphabet, Microsoft, and Oracle—have collectively signed future data center lease agreements valued at $662 billion. However, these agreements, which have not yet taken effect, are entirely absent from their balance sheets. These tech companies leverage provisions under U.S. Generally Accepted Accounting Principles (GAAP), such as short-term leases and residual value guarantees (RVGs), to keep massive liabilities off their balance sheets.
Moody’s analysts note that this “hidden debt” amounts to 113% of the adjusted debt of these five companies and could severely constrain their financial flexibility amid rapidly shifting conditions in the AI sector. As AI infrastructure development accelerates, this accounting treatment is obscuring the true economic risks facing the technology industry.
