Tech companies have more debt than before, some of which is 'invisible'

Major technology firms such as Alphabet, Amazon, Meta, Microsoft, and Oracle have seen their off-balance-sheet liabilities grow significantly over the past year. Research from Allianz Trade indicates that these invisible debts, which include long-term contracts for data centers, infrastructure, and energy, have surged from 573 billion dollars to approximately 2.6 trillion dollars. Analysts note that while these companies historically operated with minimal debt, the current scale of investment in AI and physical infrastructure has fundamentally changed their financial profile.

This shift carries potential implications for Dutch investors, including pension funds and insurance companies that hold significant exposure to the tech sector. While experts emphasize that these companies face a low risk of bankruptcy due to substantial cash reserves, there is concern regarding the unequal distribution of risks between shareholders and creditors. Financial authorities in the Netherlands are urging institutional investors to look beyond official balance sheets and consider these hidden contractual obligations when assessing the stability of their AI-related investments.