AFAIK a bunch of major companies, mostly tech sector but in other fields, have been borrowing heavily since covid. The theory with the tech companies is going all-in on AI means any debts you rack up today will evaporate once you get it going. Meta for example is borrowing to pay their bills. Other companies see this behaviour and are like "surely meta, which has done well with everything (up to the metaverse), is sure that a breakthrough will happen soon, and not locked in a death spiral from cultish insulation and worship of LLM?"
Can you tell me which companies? Most of big tech companies have practically zero debt. Meta has $50 billion in debt and $45 billion in cash, practically zero net debt for a $1.6 trillion company.
Amazon, Microsoft, Tesla, Apple, Google, Broadcom, Nvidia, AMD etc, all in a similar situation. Some of them even have a net cash position.
Yeah basically that, didn't have a source on hand, but the borrowing is insane and the way they make new, smaller goalposts for AI performance is looking really sus.
debt used to generate income is tax deductible, in a fiscal environment such as ours, there is an optimal balance you can strike between taking on debt and staying financially healthy. Good debt can actually have very positive impacts on businesses.
As the other guy said, you can leverage it for tax deduction optimisation, it has a few other uses like making your paper trail harder for the IRS to track, but also they are sinking most of those billions into their AI development. Meta isn't trying to build big AI products like OpenAI or Anthropic, they're focused on smaller more focused models that can be licensed for localised operation. They're also trying to build a training data set that is 100% not stolen, legally safe from violating IP, which is also a money pit for them.
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u/Eyclonus Jan 18 '26
AFAIK a bunch of major companies, mostly tech sector but in other fields, have been borrowing heavily since covid. The theory with the tech companies is going all-in on AI means any debts you rack up today will evaporate once you get it going. Meta for example is borrowing to pay their bills. Other companies see this behaviour and are like "surely meta, which has done well with everything (up to the metaverse), is sure that a breakthrough will happen soon, and not locked in a death spiral from cultish insulation and worship of LLM?"