Big Tech Faces $1 Trillion Lease Burden in AI Data Center Race

Reuters reported on the 4th, local time, that five major U.S. hyperscalers (operators of large-scale data centers) face $1.09 trillion (approx. 1,558 trillion won) in payments under facility and land lease agreements that have not yet commenced.

This amount is nearly four times the $285 billion (approx. 407 trillion won) in lease liabilities recognized on the balance sheets of the five companies: Amazon, Microsoft, Alphabet, Meta Platforms, and Oracle.

Most of the $1.09 trillion is related to AI data centers and has not yet been recorded as liabilities on the balance sheet.

Lease agreements signed are generally not recognized as liabilities until the facilities become available for use.

Prior to that, only future payment amounts are disclosed in the notes to the financial statements.

Reuters pointed out that while these commitments are not hidden, they show that a significant portion of AI build-out projects is not yet reflected in officially recognized lease liabilities, fixed costs, or official debt metrics.

However, the outlet explained that the $1.09 trillion cannot simply be added directly to liabilities, as uncommenced lease agreements represent undiscounted amounts to be paid over several years, whereas lease liabilities recognized on the balance sheet reflect present value.

Oracle was found to carry the highest concentration risk.

Oracle disclosed uncommenced commitments amounting to $260 billion (approx. 372 trillion won).

This is nearly seven times its recognized lease liabilities of $37.9 billion (approx. 54 trillion won).

Most of these commitments are data center-related and are scheduled to commence in fiscal years 2027 to 2029, typically lasting 15 to 19 years.

Oracle has notified that lease terms, renewal conditions, and pricing may not match those concluded with actual customers, and that the company could be exposed to risk if customers fail to renew contracts or fulfill contractual obligations.

Analyzing data from financial information provider LSEG, Reuters added that Oracle's borrowings as of the end of May were about 4.4 times its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding 12 months, and that the figure rises to 5.7 times when recognized operating and financial lease liabilities are included.

Microsoft disclosed uncommenced lease agreements totaling $329 billion (approx. 470 trillion won).

This corresponds to 3.7 times its recognized lease liabilities ($88.5 billion).

Meta disclosed uncommenced leases of $279 billion and subsequently signed an additional data center lease worth $68 billion last month, increasing its total lease amount to $347 billion.

Alphabet and Amazon disclosed $85.2 billion and $137.2 billion, respectively.

However, Amazon's figures include leases for warehouses, offices, aircraft, and vehicles, making direct comparison with the other companies difficult.

Meanwhile, Bloomberg reported the same day, citing Citadel Securities, that more than $500 billion (approx. 715 trillion won) in additional debt will be issued by 2028 to finance the purchase of AI chips for data centers.

This is in addition to the $570 billion in existing AI-related debt already absorbed by the market.

Jeff Leason, an analyst at Citadel, evaluated that "it has the potential to become the largest new sector in the investment-grade bond market."

(Photo: Getty Images)
※ Please note: This article was translated by AI and may contain errors.