To maintain their lead in the costly AI arms race while preserving pristine financial statements, Silicon Valley tech giants are shifting massive infrastructure spending off their balance sheets through complex financial instruments.

Analysis reveals that companies including Meta, xAI, Oracle, and data center operator CoreWeave have funneled over $120 billion in data center financing debt to Wall Street investors via special purpose vehicles (SPVs). This strategy shields their credit ratings but raises concerns about opaque risks and potential financial contagion.

Financial institutions like Pimco, BlackRock, Apollo, Blue Owl Capital, and banks such as JPMorgan have injected at least $120 billion into computing infrastructure projects structured through SPVs via debt and equity. This innovative financing allows Meta and Oracle to secure massive funding for AI data centers without significantly inflating their reported debt—a practice unimaginable 18 years ago but now industry-standard.

Yet, this financing boom may obscure the actual risks borne by tech firms. While SPVs nominally isolate debt, the ultimate liability if AI demand falls short remains uncertain. Analysts warn that financial stress at AI operators could unpredictably ripple through Wall Street and private credit markets. Morgan Stanley estimates tech companies’ AI ambitions will require $1.5 trillion in external financing, suggesting this model will keep expanding.

**The "Perfect" Balance Sheet Game** Silicon Valley giants, historically cash-rich with minimal debt, enjoy top credit ratings and investor trust. But the scramble for advanced AI computing has forced unprecedented borrowing. To avoid leverage spikes on balance sheets—protecting ratings and financial metrics—offloading capital needs to private investors via SPVs became the go-to solution.

A senior financing executive noted that tech firms, given their creditworthiness, can access more capital than other industries. The structure’s logic: Tech companies avoid direct borrowing; instead, SPVs raise funds to build data centers leased back to them. In defaults, lenders’ claims are typically limited to SPV assets—data centers, land, and chips—not the parent companies.

**How the Giants Operate** Meta’s landmark October 2023 deal with Blue Owl Capital created the "Beignet Investor" SPV, raising $30 billion (including $27 billion in loans from Pimco, BlackRock, and Apollo) for its Louisiana Hyperion facility. This let Meta effectively borrow $30 billion without booking debt, paving the way for a subsequent $30 billion bond offering.

Oracle has partnered with Crusoe and Blue Owl for multiple deals, including a $13 billion SPV (with $10 billion debt) for Texas data centers. It also arranged two financing packages worth $38 billion and $18 billion for projects across Texas, Wisconsin, and New Mexico—all with Oracle as the lessee.

Elon Musk’s xAI adopted a similar model in its $20 billion funding round, including $12.5 billion in debt for an SPV to purchase NVIDIA GPUs leased to xAI.

**Private Credit Market Risks** As private capital floods into AI, "project finance" deals for infrastructure have surged. UBS data shows tech firms borrowed ~$450 billion from private funds by early 2025, up $100 billion YoY, with $125 billion flowing into Meta/Blue Owl-style deals this year.

This fuels concerns in the $1.7 trillion private credit sector over inflated valuations, illiquidity, and borrower concentration. A banker close to data center deals warned that risky loans are accumulating, with OpenAI’s $1.4 trillion long-term compute commitments exposing lenders to concentrated tenant risk.

Investors also face power supply uncertainties, regulatory shifts, or hardware obsolescence. Wall Street is even securitizing AI debt, packaging loans for asset managers and pension funds in ~$10 billion deals.

**Risk Exposure & Diverging Strategies** Though SPVs aim to isolate risk, tech lessees often ultimately bear financial exposure if falling AI demand erodes facility value. In Meta’s "Beignet" deal, it holds a 20% SPV stake and provided investors a "residual value guarantee," meaning it must repay them if the data center’s value drops below a threshold and Meta exits the lease.

UBS’s Matthew Mish notes that while investors see hyperscalers as low-risk, SPV financing increases tech firms’ hidden liabilities, implying worse credit quality than apparent.

Not all giants joined this trend. Google, Microsoft, and Amazon—with mature data center operations pre-AI boom—still fund builds via cash or direct bonds, disclosing no major SPV plans. This divergence reflects varying risk appetites in the high-stakes AI gamble.