AI Companies Are Trying to Hide a Staggering Amount of Debt

As long as this debt does not make it into life insurance and pension funds, we are fine. The trouble is that private credit is taking control of some life insurance companies and off-loads this debt to these. When these fail, it will become everyone's problem.

> Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private equity firms and certain groups of pension funds. The assets of private‐equity‐controlled insurers have grown significantly in recent years, with these entities owning significantly more exposure to less‐liquid investments than other insurers

https://www.imf.org/-/media/files/publications/gfsr/2024/apr...

https://www.imf.org/-/media/files/publications/gfsr/2024/apr...

Do they? Is a company with $200 billion annual revenue and earnings (EBITDA) of $100 billion having $420 billion of off-balance-sheet debt really staggering?

In many other industries that would be a perfectly normal amount of debt to have. It's only unusual because we are used to tech companies having so much cash on hand they don't know where to put it

Are they really "trying to hide" this debt? I think it's pretty common knowledge that a lot of these companies are using debt/bonds for funding. The debt not showing up where the author wants is a reporting formality not an attempt to hide it.

Would have been nice if the article had any substantive facts in it

"No you guys it isn't actually an issue because it isn't."

Why?

"Because it isn't; okay?!"

oh ok.

Something doesn't quite smell right about this story. Here's a key paragraph from the Nikkei story that this Futurism story re-tells:

> Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.

Does that justify a "tries to hide" headline?

This is also one of those cases where the headline is free but the details are behind a paywall.

I do think the story itself is notable, but I expect the discussion is going to lack some nuance.

Only Oracle is in any kind of danger from their debt load, though. I have not checked SpaceX situation.

Meta, Google, Amazon, .. they can take the hit and go on.

Really feels like the govt + industry, through protectionism and fear-mongering, are propping up a "Too big to fail" situation.

Long term, I think the best thing the economy could do is to make training on model outputs fair-use, as suggested by Ben Thompson[1]. Short of that, the companies should enter into distillation agreements with other US labs to let them make near-Fable models.

As it stands now, the companies want to hold all the upside. While also being culturally so safety focused - "only we have the right to regulate this" that its IMO counterproductive to US leadership in AI.

A different universe where X.ai, Meta, and everyone were also building Fable competitive open weights models - because they can distill - would probably be better for the US long term. But there's too much capital on the line right now behind OpenAI / Anthropic for them to do this.

They're really in a bind IMO.

1 - http://stratechery.com/2026/whos-afraid-of-chinese-models/