The Hidden Debt Is Getting Worrisome

I'm still bullish on Alphabet, Meta, and Microsoft, but Q2 confirmed the tipping point: hyperscaler self-financing is ending, and the buildout now depends entirely on outside capital. BlackRock's latest data center bond priced at 7.53%, roughly 280bp above similarly rated debt with no AI exposure. That gap is widening, and it made me more cautious. Off-balance-sheet debt is the real story. NVIDIA carries $119B in long-term purchase agreements against ~$7.4B in disclosed liabilities. Oracle sits on $260B of future lease commitments. NVIDIA's credit backstops for neoclouds like CoreWeave appear on neither balance sheet. If those firms bust, the hyperscalers own the buildout, the debt, and the obligations. This isn't a reason to sell, per se. But I'd take these firms case by case, and Oracle looks over-levered against the rest of the group. Iuliia Zavalishina/iStock via Getty Images Most of the time when folks bring up the debt being issued to fund the AI infrastructure buildout, I've hand-waved it away with how much cash the hyperscalers make. I'm still bullish on their buildout—I just