The biggest corporations in the history of capitalism are collectively spending nearly $700 billion on AI infrastructure in a single year - and they are increasingly doing so with borrowed money. Microsoft, Google, Meta, and Amazon, known in the industry as hyperscalers, issued $121 billion in debt in 2025 alone, four times their average in previous years. That figure is expected to grow dramatically, "Hvylya" reports, citing The Atlantic.
Much of the financing comes through private equity firms including Blackstone, BlackRock, and Blue Owl Capital - companies that have grown into what some analysts describe as shadow banks since the 2008 financial crisis. Brad Lipton, a former senior adviser at the Consumer Financial Protection Bureau and now director of corporate power and financial regulation at the Roosevelt Institute, told The Atlantic that "everyone's getting tied up together." Banks lend money to private credit firms, which in turn lend it elsewhere, amplifying risk at every level.
Private equity is being squeezed from both ends. During the pandemic, these firms bought up software companies whose valuations are now plummeting because AI is expected to replace them. Their new investment strategy - data centers - is also deteriorating because the hyperscalers themselves are struggling. Google, Meta, Microsoft, Amazon, Nvidia, and Oracle have all lost between 8 and 27 percent of their value since the start of the year.
Blackstone, Blue Owl, and similar firms are sinking huge sums into data center construction on the assumption that tech companies will honor their lease payments. But the hyperscalers' cash flow is now strained, and the viability of those payments is coming into question. Endowments, pensions, and insurance funds all trust private equity to invest their money - meaning a collapse would reach far beyond Silicon Valley. "Bubbles pop. That's the system," Lipton said. "What isn't supposed to happen is that it takes down the whole financial system."
The $121 billion in hyperscaler debt, the leveraged private equity positions, and the strained institutional investors create a structure that several analysts compared to the conditions preceding the 2008 global financial crisis. The key difference: AI investment "isn't confined and may spread to the whole economy," Lipton warned.
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