The data centers used for work on artificial intelligence can cost tens of billions to build. Tech giants are finding ways to avoid being on the hook for some of those costs.
This fall, Microsoft announced a series of deals, totaling tens of billions, to lease computer power for its artificial intelligence ambitions. Meta secured almost $30 billion in financing to build a massive data center in Louisiana without taking on the debt itself. Google also committed to rent computing power from a small company and then sell some of it to OpenAI.
Those deals had one thing in common: They allowed companies that make massive quarterly profits to reduce their financial exposure to the frenetic, global buildup of data centers.
They also signaled new ways the biggest companies in tech are maneuvering to push some of the risk of the A.I. boom onto the shoulders of upstarts eager for a piece of the action. The moves let companies like Meta and Microsoft add computing power quickly and then wait to see how demand for A.I. shapes up before committing to projects that can last for decades.
Trillions of dollars are at stake as tech companies try to predict how much computing power A.I. will demand years down the line. If the big companies decide they don’t really need all that computing after the deals are over, the smaller companies and their lenders will be stuck with the consequences.
“Risk is like a tube of toothpaste,” said Shivaram Rajgopal, an accounting professor at Columbia Business School. “You press it here, it is going to come out somewhere else. It’s always in the system, it’s a matter of where.”
These deals also add a level of mystery to data center financing because many companies running the data centers for the tech giants are far from the household names of Silicon Valley. Some are privately held, do business with large start-ups, and borrow from private lenders, all of which offer less transparency about their stability.
Meta’s data center project in Louisiana mixes many of those creative financing elements into a multibillion-dollar plan taking shape among farmlands in the northeast corner of the state. Meta created a so-called special purpose vehicle named Beignet Investor LLC and worked with Blue Owl Capital, a private credit firm, to borrow money for the project.
Meta was responsible for constructing the data center, but Blue Owl was on the hook for 80 percent of the financing. As part of the arrangement, Meta agreed to “rent” the data center from Beignet with a series of four-year leases. That allows the tech giant to categorize the funding as operating cost, not debt, according to financial filings.
Microsoft and Google have arrangements to provide computing power to OpenAI. They will supply some of that through deals with CoreWeave, the biggest neocloud provider. OpenAI has also committed to buy as much as $22.4 billion in computing power directly from CoreWeave.
To build its computing capacity, CoreWeave is taking on billions of dollars in debt, much of it at interest rates at 10 percent or higher. In effect, CoreWeave has tied its future to OpenAI.
When asked about the OpenAI relationship, a CoreWeave spokeswoman said the company is aggressively diversifying its customer base. She said no single customer represents more than 35 percent of its future revenue under contract, but declined to say how much of its computing power would ultimately be used by OpenAI.
Industry experts say the costs of the A.I. build out have gotten so large that it is no longer possible to mitigate most of the risk. So the tech giants are spreading it around.
