Are they really "trying to hide" this debt? I think it's pretty common knowledge that a lot of these companies are using debt/bonds for funding. The debt not showing up where the author wants is a reporting formality not an attempt to hide it.
If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage.
A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive.
I have so many things i want to do and still sitting it out due to cost.
Really feels like the govt + industry, through protectionism and fear-mongering, are propping up a "Too big to fail" situation.
Long term, I think the best thing the economy could do is to make training on model outputs fair-use, as suggested by Ben Thompson[1]. Short of that, the companies should enter into distillation agreements with other US labs to let them make near-Fable models.
As it stands now, the companies want to hold all the upside. While also being culturally so safety focused - "only we have the right to regulate this" that its IMO counterproductive to US leadership in AI.
A different universe where X.ai, Meta, and everyone were also building Fable competitive open weights models - because they can distill - would probably be better for the US long term. But there's too much capital on the line right now behind OpenAI / Anthropic for them to do this.
Do they? Is a company with $200 billion annual revenue and earnings (EBITDA) of $100 billion having $420 billion of off-balance-sheet debt really staggering?
In many other industries that would be a perfectly normal amount of debt to have. It's only unusual because we are used to tech companies having so much cash on hand they don't know where to put it
I think that a lot of the accounting, used mostly in factories and such, is having trouble with the new financial reality in the tech space. Running a factory, having a debt to asset ratio over 1.0 would be disastrous because the assets are unable to produce revenue fast enough to cover the interest.
With tech it's weird because something that is worth nothing on an accounting sheet could be worth a hundred billion dollars during a sale to Alphabet or Meta.
As long as this debt does not make it into life insurance and pension funds, we are fine. The trouble is that private credit is taking control of some life insurance companies and off-loads this debt to these. When these fail, it will become everyone's problem.
> Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private equity firms and certain groups of pension funds. The assets of private‐equity‐controlled insurers have grown significantly in recent years, with these entities owning significantly more exposure to less‐liquid investments than other insurers
It impacts investment or lack of it in other places. I had some visibility to a company trying to sell and was told that if it wasn’t AI there just wasn’t much money out there.
Something doesn't quite smell
right about this story. Here's a key paragraph from the Nikkei story that this Futurism story re-tells:
> Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.
Does that justify a "tries to hide" headline?
This is also one of those cases where the headline is free but the details are behind a paywall.
I do think the story itself is notable, but I expect the discussion is going to lack some nuance.
The crux of the problem is models are not evolving anymore, they're iterating. Cheaper, faster, better. We're only seeing better, and that's because there is fierce competition with massive debt behind it. The "cheaper and faster" part is all taking place with local models. All of this adds up to a big red flag for a bubble.
the business model is burning billions, hiding the debt, and telling investors the losses are actually R&D. we used to call this fraud. now it's a pitch deck.
They're obviously not taking on enough debt because I'm paying $200 per month for one AI, $100 per month for a second, a $20 "donation" to Gemini[1] paying for a service I never use just to fund its development, and yet here I am doing my own laundry, making my own damn breakfast, lunch, and dinner and manually tracking my Calories and macros, I'm putting my own damn dishes away, racking and unracking my own damn weights at home, and taking minutes to set up and record my exercise form and then take screenshots of it of key frames that I manually ask the AI's to form check (they don't consume video natively as an input) rather than have a robot do any of the above (including act as a fitness coach) because where's my household robot I can rent on a monthly payment? Can't be that expensive, servos and pressure sensors and cameras are cheap, what's missing here is that here we are and AI can't do shit for me day to day other than knowledge work and software engineering. I'd like these companies to take on as much debt as possible and rent me a robot that can do stuff for me. I have a petition for this that you can sign here if you want:
[1] I don't use Gemini for anything ever, I pay just to put my vote to them making a useful model (I know my $20 isn't much but I apply Kant'e categorical imperative - if everyone did it they'd take their AI seriously and not be in last place behind OpenAI, Anthropic, and even open-weight models).
46 comments
[ 0.28 ms ] story [ 26.9 ms ] threadIt's a huge gamble.
bailout incoming
will make subprime crash seem like child's play
sure you won't be able to ever afford a home but we'll have tons of cheap super-hardware barely used
If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage.
A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive.
I have so many things i want to do and still sitting it out due to cost.
Neither was AIG's, until we all woke up one day and suddenly it was
Why?
"Because it isn't; okay?!"
oh ok.
Long term, I think the best thing the economy could do is to make training on model outputs fair-use, as suggested by Ben Thompson[1]. Short of that, the companies should enter into distillation agreements with other US labs to let them make near-Fable models.
As it stands now, the companies want to hold all the upside. While also being culturally so safety focused - "only we have the right to regulate this" that its IMO counterproductive to US leadership in AI.
A different universe where X.ai, Meta, and everyone were also building Fable competitive open weights models - because they can distill - would probably be better for the US long term. But there's too much capital on the line right now behind OpenAI / Anthropic for them to do this.
They're really in a bind IMO.
1 - http://stratechery.com/2026/whos-afraid-of-chinese-models/
In many other industries that would be a perfectly normal amount of debt to have. It's only unusual because we are used to tech companies having so much cash on hand they don't know where to put it
With tech it's weird because something that is worth nothing on an accounting sheet could be worth a hundred billion dollars during a sale to Alphabet or Meta.
> Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private equity firms and certain groups of pension funds. The assets of private‐equity‐controlled insurers have grown significantly in recent years, with these entities owning significantly more exposure to less‐liquid investments than other insurers
https://www.imf.org/-/media/files/publications/gfsr/2024/apr...
https://www.imf.org/-/media/files/publications/gfsr/2024/apr...
Meta, Google, Amazon, .. they can take the hit and go on.
https://asia.nikkei.com/business/technology/five-us-tech-gia...
> Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.
Does that justify a "tries to hide" headline?
This is also one of those cases where the headline is free but the details are behind a paywall.
I do think the story itself is notable, but I expect the discussion is going to lack some nuance.
Isn't this an existential type of bet?
https://www.change.org/p/create-a-physical-embodiment-for-cl...
[1] I don't use Gemini for anything ever, I pay just to put my vote to them making a useful model (I know my $20 isn't much but I apply Kant'e categorical imperative - if everyone did it they'd take their AI seriously and not be in last place behind OpenAI, Anthropic, and even open-weight models).