Microsoft and Meta signed lease agreements for $1.1 trillion
Five of the world's largest technology companies – Microsoft, Meta, Oracle, Amazon, and Alphabet – have collectively committed to approximately $1.16 trillion in future lease payments. Most of the amount is intended for the construction of data centers for the development and services of artificial intelligence. These are facilities that have not yet opened, but the companies have already locked themselves into long-term mega-contracts to ensure they have the infrastructure required to lead the market in the coming years.
Five of the world's largest technology companies – Microsoft, Meta, Oracle, Amazon, and Alphabet – have collectively committed to approximately $1.16 trillion in future lease payments. Most of the amount is intended for the construction of data centers for the development and services of artificial intelligence (AI). These are facilities that have not yet opened, but the companies have already locked themselves into long-term mega-contracts to ensure they have the infrastructure required to lead the market in the coming years.
Why does the debt not appear on the balance sheets?
The surprising figure is that these obligations, which are four times higher than the companies' currently recognized lease debts, do not yet appear in official financial reports. According to accounting rules, a signed lease agreement is not considered a liability on the balance sheet until the asset is ready for actual use. This means that a large portion of the tech giants' spending on AI remains off the radar of the standard financial metrics that investors examine, making it difficult to assess their true level of leverage.
Microsoft leads the list with a backlog of future obligations of $329.1 billion, a sum that completely dwarfs its current lease debts, which stand at approximately $88.5 billion. Wall Street shows great confidence in Microsoft's ability to generate revenue from this investment, thanks to the growth of its cloud services and Copilot subscriptions. However, if demand for AI slows down even slightly, the company could find itself paying for large data centers that it cannot fill.
Meta's accelerated bet
Meta is showing an even faster growth rate in its obligations. The company reported future lease obligations of approximately $279 billion, and during the month of July alone, it signed additional contracts worth $68 billion for new data centers. These obligations of Meta are eight times higher than last year, a figure that illustrates the rapid race it is in to build its technological production capacity.
Ultimately, this is a double-edged bet. On one hand, if demand for AI continues to grow, these contracts will ensure the continued growth of the tech giants. On the other hand, a slight slowdown in the market could leave these companies with large financial obligations for years to come, for workspaces and servers they do not need.
