Moody's Warning: AI Race Poses Significant Financial Risk, $662 Billion Yet to Be Reflected on Tech Giants' Balance Sheets

BlockBeats News, February 25th, a well-known rating agency Moody's released an in-depth industry report pointing out that the technology industry, in a frenzy to build an artificial intelligence infrastructure, has created a massive financial risk. The top five US hyperscale cloud service providers have cumulatively committed to future data center leases totaling up to $662 billion, which have not yet commenced and therefore are not current liabilities, not fully reflected on their balance sheets. However, as these leases gradually kick in over the next few years, over $500 billion of data center activity will be formally recorded on the balance sheet.

In the report, Moody's analyzed the financial disclosures of Amazon, Meta, Alphabet (Google's parent company), Microsoft, and Oracle, stating that the unprecedented scale of artificial intelligence data center construction is putting significant pressure on traditional accounting metrics. By the end of 2025, the cumulative undiscounted future lease commitments of the five tech giants will reach $969 billion, with over two-thirds, or $662 billion, representing leases that have not yet commenced. Per Generally Accepted Accounting Principles (GAAP), these companies are currently not required to record these substantial obligations on the current balance sheet. These "off-balance-sheet" commitments represent hidden debt, and once gradually transitioned to on-balance-sheet liabilities, will significantly increase adjusted debt levels and potentially impact financial flexibility and credit ratings.