Key Takeaways:
Michael Burry flagged $1.65 trillion in off-balance-sheet debt at five US technology giants, exceeding their total reported liabilities.
The hidden debt tied to artificial intelligence infrastructure investments now surpasses the companies' fully disclosed borrowings, a Nikkei Research study showed, with Meta Platforms Inc. carrying the largest share at $420 billion.
"The scale of off-balance-sheet financing through lease structures has created a shadow liability that investors cannot assess from reported financials alone," Burry, who gained fame for betting against mortgage-backed securities before the 2008 financial crisis, said in a July 21 post on X.
The total stood in the low hundreds of billions as recently as 2022 but has accelerated sharply, with the 2026 balance projected at roughly double the 2025 level. Oracle Corp. saw its off-balance-sheet debt surge about 30-fold over four years to $273.3 billion, much of it tied to data center commitments supporting OpenAI. Alphabet Inc. made its first equity offering in roughly two decades, raising over $80 billion from Warren Buffett and other investors, while Microsoft Corp. and Amazon.com Inc. have undertaken significant layoffs that some critics link to preserving cash for continued capital expenditure.
The revelation comes as the five companies prepare to report second-quarter results, with investors likely to scrutinize off-balance-sheet commitments more closely. The main mechanism involves innovative lease transactions structured around timing issues that keep obligations off balance sheets, according to the Nikkei study.
How AI Infrastructure Spending Created a $1.65 Trillion Shadow
The debt buildup mirrors the rapid expansion of AI data centers, where companies have committed billions to long-term leases for GPU clusters, power purchase agreements, and colocation facilities. Meta alone has poured $7.7 billion into AI initiatives in the first quarter of fiscal 2026, dwarfing the $1.33 billion invested in its Connectivity segment and the $1.05 billion allocated to its core Space business, according to the company's latest financial disclosures.
Oracle's exposure is particularly concentrated. The $273.3 billion in off-balance-sheet debt relies heavily on the future profitability of OpenAI, leaked financials for 2024 and 2025 suggest the startup may struggle to meet its payment obligations to Oracle, according to the Nikkei report. That concentration risk makes Oracle the most vulnerable among the five if the AI demand cycle falters.
Microsoft and Amazon, meanwhile, have turned to workforce reductions as a cash preservation tool. Both companies have conducted multiple rounds of layoffs, which some analysts interpret as an effort to free up capital for the escalating AI infrastructure buildout without further straining their balance sheets.
What This Means for Tech Valuations
The hidden debt challenge arrives as big tech valuations face pressure from multiple directions. Chinese AI alternatives, particularly the Moonshot K3 model, are emerging as credible competitors that could compress margins in the AI services market. The combination of rising off-balance-sheet leverage and intensifying competition creates a scenario where the market may need to reassess the risk premium assigned to the sector's largest names.
For investors, the key question is whether the market has already priced in these off-balance-sheet obligations or whether a repricing is imminent as second-quarter earnings season begins. The five companies are scheduled to report results in the coming weeks, and any disclosure of additional off-balance-sheet commitments could trigger a broader reassessment of tech sector leverage.
This article is for informational purposes only and does not constitute investment advice.
