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How tech’s biggest companies are offloading risks of the AI boom
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Meta is investing billions of dollars in new data centres, such as the one (above) being constructed in Eagle Mountain, Utah.
PHOTO: CHRISTIE HEMM KLOK/NYTIMES
Karen Weise and Eli Tan
- Tech giants like Microsoft & Meta are offloading AI data centre investment risk onto smaller firms via creative financing deals, like Meta's "renting" data centres.
- Microsoft is using shorter-term "neocloud" deals to gain computing power quickly, exemplified by deals with Nebius, Nscale, Iren and Lambda, providing flexibility.
- Companies like CoreWeave are taking on billions in debt to build AI computing capacity linked to tech giants, highlighting potential risks if AI demand slows.
AI generated
SEATTLE/SAN FRANCISCO – This autumn, Microsoft announced a series of deals, totalling tens of billions of dollars, to lease computer power for its artificial intelligence (AI) ambitions. Meta secured almost US$30 billion (S$38.7 billion) in financing to build a massive data centre in Louisiana without taking on the debt itself. Google also committed to renting computing power from a small company and then selling 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 build-up of data centres.
