Meta (META) secured $30B in financing for a Louisiana data center, adding to its $37B total debt against $60B in cash. Oracle holds $96B in debt post $18B bond issuance and $38B loan, potentially straining its $3B quarterly net income. Tech firms borrowed $75B for AI data centers, double the annual average.

Big tech companies are increasingly funding AI ambitions through debt, with firms like Meta, Oracle, and others issuing $75 billion in bonds and loans, surpassing yearly averages. Capital expenditures are pushing against cash flow limits, potentially impacting sustainable growth and valuations. Data center spending could hit $3 trillion by 2028, with a significant share financed externally.

Companies like Meta and Oracle face substantial debt, with Meta’s recent $30B financing manageable against $20B+ quarterly operating cash flows. Smaller AI players like AMD may struggle with higher borrowing costs, while Nvidia’s minimal debt allows internal funding. Debt reliance accelerates AI progress but raises risks, especially with high valuations.

Blackstone is using “exotic financial instruments” to finance QTS Data Centers, a major player in AI infrastructure. Tech giants investing heavily in AI through a mix of debt, securitization, and off-balance-sheet vehicles, reminiscent of the 2008 financial crisis. Investors must cautiously assess AI-driven stocks for balance sheet strength and growth potential.

Read more at Yahoo Finance: The AI Boom Is Hitting a Cash Crunch