Moody's Warns AI Arms Race Poses Significant Financial Risk, $662 Billion Yet to Be Recognized on Big Techs' Balance Sheets

February 25 — Moody’s, a top credit rating agency, issued an in-depth industry report warning that the U.S. tech sector’s frenzied race to build artificial intelligence (AI) infrastructure is creating significant financial risks. The five major U.S. hyperscale cloud providers have collectively committed to uncommenced future data center leases totaling $662 billion — obligations not currently recognized as current liabilities or reflected on their balance sheets. As these leases take effect over the next few years, more than $500 billion in data center-related activity will be formally recorded on their balance sheets. In the report, Moody’s analyzed financial disclosures from Amazon, Meta, Alphabet (Google’s parent), Microsoft, and Oracle, noting that the unprecedented scale of AI data center construction is straining traditional accounting metrics. By end-2025, the five tech giants’ total undiscounted future lease commitments reached $969 billion — with over two-thirds ($662 billion) consisting of uncommenced leases. Under U.S. Generally Accepted Accounting Principles (GAAP), these companies are not required to record these sizeable obligations on their current balance sheets. These “off-balance-sheet” commitments represent implicit liabilities that, once gradually converted to on-balance-sheet obligations, will sharply raise adjusted debt levels and potentially hurt financial flexibility and credit ratings.