tldr; They used “special-purpose vehicle” to hide the debt. Accounting’s version of “anal doesn’t count, silly”.
A bigger factor in AI fraud economy, is the circular fake assets and fake revenue. $1T valuations in top 2 LLM providers implies $50B-$100B eventual recurring profits with little to no reinvestment. $1.75T SpaceX valuation was based entirely on fraud of at least 5x more expensive space data centers than earth and supposed 90% of value of company is based on Grok enterprise TAM. IPO was boosted with fake Anthropic paper lease where they were renting gpus for 5x the cost, and over 2x the list price of on demand rates from Nebius/coreweave, but with instant cancel clauses, and “first 2 months free” scam. 11th hour similar Google deal (who owns 6%+ of spacex) further amplified the SpaceX fraud IPO.
The main circular fraud though, is most of the companies (Nvidia not mentioned) in article put an inflated asset on their balance sheet, while trading revenue credits for those investments. Article’s “footnote debt” is largely to serve those revenue credits.
I’ve said it before, I’ll say it again…
The country which will win the AI race is the one who wastes the least amount of money on AI infrastructure.
The US will be the biggest loser in this “competition”.
It’s going to be whichever country has the most human researchers.
Makes sense. Oligopolies collude. No news there.
The AI bubble will pop within the next couple of months. It’s pretty interesting, I wonder if we’ve ever seen an economic bubble so clearly before it comes to an end.
Every crypto bubble?
Why months, not quarters or years?
More like it’s already popping. The Korean AI bubble already popped, dragging Intel, AMD, ARM, Nokia and others down by a significant amount. They won’t bounce back. SpaceX is going down down down. QE won’t save this one because nobody wants USD anymore.
I agree, it’s already popping. But the pop is still very, very slow with most investors still in denial and keeping their paragliders open.
Five companies owe more money than their balance sheets admit. A Nikkei analysis of financial footnotes at Alphabet, Microsoft, Amazon, Meta, and Oracle found $1.65 trillion in off-balance-sheet obligations tied to AI infrastructure — binding, must-pay commitments parked in the fine print
Good thing I don’t invest in these big names, not only because of overvaluation but also because of corruption. My mom told me to be careful with investing because companies go bankrupt but i kinda dismissed her concerns because I am thinking that the days of Enron accounting magic is over. But it looks like it’s still alive and well. Although I doubt executives will be held accountable.
I don’t know why, but I read this as “Five Guys” and thought holy shit I didn’t realize a burger company could be so broke. No wonder their prices are so high!
Oh boy I can’t wait to see the future of every person under 65 and with a net worth below $100 million get basically vaporized from space. I can’t wait to be the bailout source for this… Although I don’t think there’s enough money in existence to bail this one out.
Don’t even talk about bailouts, it’s totally unacceptable this time. These companies ARE NOT essential, and are not too big to fail.
Their debts are by Venture Capitalist investors, and by billionaires from the dot com bom. They have the money to fail.
This time we let them fail.
I WANT TO SEE REPO MEN AND BANK OFFICIALS MARCHING INTO MANSIONS TO RECLAIM THE MONEY.
Let some of these assholes live in trailer parks.
The issue is that they became part of everyone’s 401k so the bootlickers and greedy fucks in Congress will tell us they’re 100% essential because if they fail you lose your retirement.
I hate this system… Redistribution of wealth for the rich, rugged individualism for the pleb.
They aren’t even public companies yet. They are not a part of everyone’s 401ks.
MS, AMZN, Oracle, & NVDA were around before this, and will exist even when the bubble pops. Literally zero reason for a bailout.
There is a very good chance that Oracle doesn’t survive if OpenAI tanks.
I hope Larry Ellison has to sell off his media companies and still has a heart attack in the end. He funds Israel.
Larry Ellison is an even bigger son of a bitch than your standard Israel funder.
Not just content with supporting a genocide, he wants to control all media and human behavior.
Not even to protect his collaborators, but because there’s money in it.
Larry Ellison belongs in prison.
He can take his shitty closed source database with him.
So you’re telling me AI is going to bring positive change to the world?!
Okay? That still doesn’t mean they should receive a cent of bailout money. They’ve been declining for a while and that’s not the U.S. Taxpayer’s problem.
I never said a thing about bailouts. No one is baling these assholes out. They don’t employee enough people to be important enough in the grand scheme of things to be afforded a bailout. Also, there isn’t enough money to bail them out, because they will never be profitable and they know that. That’s why they are angling to steal our retirement.
The current retirement structure is gambling and exploiting labor. I’m sorry but it’s the only way to fix it. The people who bought into it need to suffer, too.
The current administration is claiming AI is absolutely essential to our national security, scientific research, energy, and everything else. This is all being done by political appointees who know next to nothing in general, and even less about the history and current state of “AI”. Being ordered by people who do not care about wasting taxypayer money or running up absurd deficits. Bailout incoming.
Wait…too big to fail meant that they’re supposed to be important to the CITIZENS??? Fuck that! All these banks and mortgage lenders and automotive industry leaders have all been bailed out as too big to fail.
I never took that to mean that they provide value. I just took it to mean “fuck you peasants, we’re big business, and therefore fuck you! Money please! Money me now!”
If I’d have known they meant it was for OUR benefit, I’d have called bullshit 20 years ago.
*jail
Ready to reclaim some land
https://www.hgcsa.org/oracle-ceo-larry-ellison-buying-hawaiian-island-of-lanai/
I totally agree with you and I think this time there really isn’t a way to bail out AI companies or every other company that’s too big to fail during the poly crisis. No matter what irresponsible shit the elites get up to fundamentally we’re the ones that get fucked though even if they can’t extract enough blood from us to nationalize the losses.
They’re such money pits that they can’t be bailed out - give them a hundred billion dollars and they’ll be back next month for more.
They aren’t a functioning business that just needs help getting back to profitability or help with some sort term crisis, they take hundreds of billions and set it on fire.
And deciding whether to bail them out is going to be like the onions video on America’s money hole where the debate is how much money to throw into the hole to be burned instead of whether they should do it at all.
MY FATHER WORKED TWO JOBS SO HE WOULD HAVE ENOUGH MONEY TO THROW IN THE MONEY HOLE
with a net worth below $100 million
Far fewer than you’d think, once hyperinflation kicks in.
You’ll be lucky if you can buy gum for less than $100M at the rate we’re climbing.
I am selling a used piece of gum for cheap: only $50 million! Buy now while supplies last.
Well now hang on. Lets not get ahead of ourselves here. We have discuss some core primary facts about this gum before we can determine value.
First off, what brand gum? How much flavor is left? Does it still have enough consistant texture to blow bubbles? You can’t just leave these things up in the air.
It’s 5 gum.
Don’t worry about that.
I’ll lend you the $50M for the gum if you agree to buy $50M of my stuff in the future.
Seattle is gunna have a booming economy of prospectors scavenging the gum wall
It’s fine SpaceX is pretending to be an AI company (the home of MechaHitler) so won’t have the pennies left to gets it’s space Vaporizing Centers launched (honestly more feasible than data centers).
🤞maybe this can all end with Saudis releasing footage of Elon moonwalking when the realize there’s no money left for the line due to Twitter.
I am actually thinking ask of these companies imploding would be good for the human race.
Imagine a solid hard reset on the internet? Yes please.
Will this fuck me over yes, but that will be temporary
We gotta start building alternatives already. Us being here on Lemmy is already a start.
Everything is temporary when you think about it
Life is just a temporary break from death.
This shit led to the Great Depression… I guess it’ll be a Greater Depression, just on figures alone.
C’mon! With Trump in charge, it has to be The Greatest Depression!
“Yes, this is The Greatest Depression. Nobody has ever seen anything like it. Even the best economists, very smart people, they say to me ‘Donald, Mr President, who could know?’ Nobody could have known this would happen, but they tell me it was caused by Biden. Or Obama. I’ve also asked the FBI to check Hillary’s emails and Hunter’s laptop.”
“They said it could never happen. It could never be done. But I did it. First one in history to trigger such a great depression. The greatest depression.”
great depression led to a ww2, is there please some chance to please not start ww3 please
Two of the three most powerful nations are involved in wars of aggression and the third is backing them up. I would say we are pretty much there already.
The US is at war and China is not. The third most powerful country would be India and afaik they are not at war right now.
Unlike ww2, ww3 would not be a boon to production or the economy
Supply chains would be the first target, like how pulling the plug on rare earth metals is the goto now, and how much can be fully and entirely made at home?
We’d be sitting around scratching our asses wishing we had any form of modern appliance before long. Planes, ships, cars, generators, terbines, computers, microchips would cease manufacture without a comprehensive functioning global supply chain
Fuel, oil, fertiliser would be cut off for most countries
Without an incredible stockpile, most countries probably couldn’t sustain any world war
WW2 was not a boon to production. Well it was for weapons, but most of Europe and good parts of Asia were destroyed with millions dead. The only country coming out of it in better shape was the US, which did not see bombing and had relatively low human losses(still horrible to be clear, but not even close to what others had).
Modern wars suck and any smart country will try to avoid them. Hence you see Russia being fucked over by the EU via Ukraine and China fucking the US via Iran. Obviously you need dumb leaders to walk into those traps into the first place.
Australia had a huge sustained boom from the late 1940s through to 1970s, which was also aided by the Korean war. The boom tapered off with the oil shocks and stagflation of the early-to-mid 1970s
The UK also had a boom, recovering from rationing into the 1950s they joined the global long boom until the 1970s but yes it was not as strong as other countries booms due to the damage and cost of the war
Harold Macmillan’s famous 1957 line “you’ve never had it so good” sums it up pretty well
Europe had a massive boom known as the golden age of capitalism, nfi what you are talking about
https://en.wikipedia.org/wiki/Post–World_War_II_economic_expansion
The United States, the Soviet Union, Australia and Western European and East Asian countries in particular experienced unusually high and sustained growth, together with full employment.
That was the time after WW2. Of cause the economy does a lot better, when you do not bomb out cities and kill millions. That could have happened earlier, without the war and everybody would have been better of.
Military spending, wealth redistribution, tax system changes and the Marshal Plan for rebuilding Europe are direct war results that caused the boom. Everything needed rebuilding and everyone wanted to work together, leading to economic agreements and the formation of the European Union. Everyone needed materials like steel for construction. The Korean War then seriously boosted countries like Japan and Australia again
Yeah. Revolution now. We need to fucking build a parallel internationalist power structure and just freeze out the billionaires from the economy. Fuck the UN, we make our own with black flags and snooker. It’s up to us to define what it means to be an adult.
Is there like a checklist for us being in world war three already?
This is why they want to get into your 401(k)s & pension funds. Don’t let them.
Oh, I won’t.
Mostly because I’m 42, and have no 401k, or pension.
I’m clutching my 10k tightly. They won’t be getting my future 2 weeks of groceries!
deleted by creator
I genuinely am having a hard time believing this because the image looks like it was generated… The kind of reality the .01% has shoved us into.
That’s because it’s from Gadget Review, a website that looks like it uses AI to generate graphics and (at least) augment its articles.
The original article is at least helpfully linked at the top:
https://asia.nikkei.com/business/technology/five-us-tech-giants-hidden-debts-soar-to-1.65tn-on-opaque-ai-funding
Edit: I see Gadget Review pop up more and more and I’ve started liking their content less and less. The editorial guidelines say they use AI right on the page you linked. And if I scroll down and click on a random article , it’s AI generated and based on a tweet by CSAM poster Dom Lucre. It’s not the first article I’ve seen that’s basically repeating a tweet from some extreme looking Twitter account either.
It was definitely generated by AI.
There’s some serious irony here. The exact type of irony that is distinct to the people forcing the corruption tool’s existence.
Ugh, those hedgehog smileyfaces can fuck all the way off
The image is ai generated, but the numbers from Nikkei aren’t
Would be interesting to include anthropic, openai etc in this list
They’re not public and aren’t forced to report these numbers. But yeah the amount of hidden debt in AI is much higher.
Also nvidia
Exititis makes accounting look creative.
We could have avoided it if politicians didn’t fell for big tech’s tricks…
Politicians didn’t fall for anything. They’re getting kickbacks and are voting accordingly.
