The hidden debt behind the AI boom: How Meta and xAI are quietly raising billions to finance AI investments

The race to dominate artificial intelligence is pushing tech giants into uncharted financial territory. Behind the scenes, a quiet revolution is reshaping how companies fund their massive AI ambitions. Instead of piling debt directly onto their books, firms like Meta and Elon Musk’s xAI are using creative financing structures to raise billions, keeping much of their liabilities hidden from plain sight.

According to new research by Bloomberg, this month alone, Meta Platforms Inc. secured roughly $60 billion to supercharge its data center expansion, with half of that cleverly structured to avoid showing up as corporate debt. At the same time, Musk’s xAI is pursuing a $20 billion arrangement built around leased Nvidia chips. Together, they’re setting the tone for a new era of off-balance-sheet financing that could reshape how Big Tech bankrolls the AI boom.

“Just this month, Meta Platforms Inc. has secured about $60 billion in capital to build data centers, part of its spending to get ahead in the artificial intelligence race. Half of that won’t show up on the social media giant’s balance sheet as debt,” Bloomberg reported.

“Meta is among firms popularizing a way for debt to sit completely off the balance sheet, allowing enormous sums to be raised while limiting impact on its financial health. Morgan Stanley structured a $30 billion deal — the largest private capital transaction on record — where the debt would sit in a special purpose vehicle tied to Blue Owl Capital Inc. That made it easier for Meta to raise another $30 billion this week the usual way, in the corporate bond market,” the report added.

Meta’s $60 Billion Bet on Data Centers

Meta is at the forefront of this quiet shift. The company has popularized a model where debt is parked entirely off its balance sheet through special purpose vehicles (SPVs), letting it borrow huge sums without disrupting key financial ratios or spooking investors. In a record-breaking deal, Morgan Stanley helped orchestrate a $30 billion transaction involving Blue Owl Capital, where the debt sits in an SPV tied to the asset manager. That structure gave Meta the breathing room to raise another $30 billion in the bond market just days later—bringing its total to $60 billion, all earmarked for AI-driven infrastructure.

The approach helps Meta protect its credit rating while building hyperscale data centers to keep up with AI demand. These facilities require billions in upfront spending for servers, cooling systems, and power. But the off-balance-sheet strategy gives the company flexibility to grow aggressively without showing an alarming surge in debt on paper.

Musk’s xAI and the Art of the Chip Lease

Elon Musk’s xAI is taking a different but equally inventive route. The startup is putting together a $20 billion financing package that mixes equity with debt—most of it routed through an SPV that will buy Nvidia chips and lease them back to xAI for five years. The hardware itself serves as collateral, keeping the debt off xAI’s books while giving the company the computing firepower it needs to scale fast.

As we reported early this month, “The $20 billion is being raised through a special purpose vehicle (SPV) that will purchase Nvidia processors and lease them to xAI over five years. This structure limits investors’ direct debt exposure while ensuring xAI has access to the chips it needs. About $7.5 billion will come in as equity and up to $12.5 billion as debt.”

Nvidia is reportedly contributing about $2 billion in equity to the deal, alongside heavyweight investors such as Apollo Global Management, Diameter Capital Partners, and Valor Capital. The funding is expected to accelerate the construction of xAI’s Colossus 2 data center in Tennessee, central to developing its next generation of AI models. Musk has publicly denied that xAI is raising capital, calling such reports “fake news,” but the SPV structure offers a convenient technicality—it isn’t xAI borrowing money directly, even if the cash ultimately fuels its AI ambitions.

Wall Street’s Growing Unease About AI Bubble

Off-balance-sheet financing isn’t new, but its growing use in AI investments is starting to raise eyebrows. Analysts warn that as companies stretch their balance sheets to stay ahead in the AI race, they’re taking on risks that are harder for investors to see. Oracle’s debt, for instance, is projected to more than double to $290 billion by 2028, driven by AI-related infrastructure. Microsoft’s deep pockets make it an exception—its capital spending reassures rather than alarms investors—but not every company can sustain that level of risk.

The concern is that off-balance-sheet structures can mask true exposure. Investors have limited visibility into how much leverage companies are really taking on. If AI delivers on its promise, the returns could easily justify the borrowing. But if demand slows or new hardware cycles out too quickly, these companies could be stuck with costly assets and heavy hidden liabilities. As Gil Luria of D.A. Davidson put it, financing speculative AI builds through debt instead of equity magnifies the danger, especially for younger firms.

The Bigger Picture

Meta and xAI’s financing maneuvers reflect just how expensive the AI arms race has become. Building and running data centers at AI scale requires unprecedented capital—and the willingness to get creative. Off-balance-sheet debt is giving tech companies the agility to grow without setting off alarms, but it’s also blurring the lines between smart financial engineering and hidden risk.

As this model spreads, regulators and investors are starting to pay closer attention. The question isn’t whether AI will reshape industries—it already is—but whether the financial structures fueling it are sustainable. For now, the money is flowing, and the AI boom keeps accelerating. But behind the impressive numbers lies a quiet truth: much of this growth is built on debt that few can see.