Meta Platforms Has $420 Billion in Hidden Debt, and It’s Growing
Meta Platforms faces investor concerns over $420 billion in off-balance-sheet debt linked to massive AI infrastructure investments. While its reported long-term debt is $58.7 billion, Nikkei Asia reports significant hidden liabilities from undelivered equipment contracts. Meta plans to spend up to $145 billion on capital expenditures this year, accelerating spending on projects like the Hyperion data center funded by partners to keep costs off its balance sheet. Investors await earnings for clarity on margin impacts.
Artificial intelligence provides some great opportunities for many companies today. But it’s also a very expensive proposition that’s weighing down some of the biggest companies in the stock market. Meta Platforms (META -2.19%) is down 3% so far this year on fears that the company is taking on too much debt as it invests in AI infrastructure.
Meta’s balance sheet shows that the company has about $58.7 billion in long-term debt. But a new report indicates that the company’s debt load is much greater. Nikkei Asia reports that Meta Platforms has another $420 billion in off-balance-sheet debt. That number has grown substantially since 2022, the outlet reported.
Should investors be concerned about Meta Platforms’ stock?
Image source: The Motley Fool.
What is off-balance-sheet debt?
Publicly traded companies are required to report the amount of debt they are incurring. But under accounting rules, equipment such as graphics processing units and servers that are under long-term contracts but not yet delivered is treated as an off-balance-sheet item. Meta and other companies disclose future debt in annotations on their financial statements.
When Meta’s GPUs are delivered and the data centers become operational, this hidden debt will begin to appear on the quarterly balance sheet.
Meta is one of five companies -- the others being Alphabet, Amazon, Microsoft, and Oracle -- analyzed in the Nikkei Asia report. The five companies, all of which are making significant investments in AI infrastructure, have a collective $1.65 trillion in debt that is not reflected on the companies' balance sheets.
Meta is accelerating its spending on AI
Meta Platforms shows no appetite to slow its spending. The company spent $72 billion on capital expenditures in 2025 -- most of it related to AI -- and said in its first-quarter report that it would spend between $125 billion and $145 billion this year.
NASDAQ: META
Key Data Points
Its $50 billion Hyperion data center planned for Louisiana is getting a lot of attention. The center was first announced as a $27 billion project funded by Meta’s joint venture with Blue Owl Capital. But in June, Meta announced it was expanding the project from a 2-gigawatt center to 5 gigawatts of capacity as it seeks to build out enough AI infrastructure to meet demand.
Blue Owl and its partners are funding the construction, allowing the project to remain off Meta’s balance sheet. Blue Owl will own 80% of Hyperion, with Meta owning the remaining 20%.
Should investors be concerned about Meta’s debt?
On the one hand, $420 billion is a big number. There are only 30 companies in the world with an entire valuation of more than $420 billion, so when Meta takes on that much debt that hasn’t even made it to its balance sheet yet, it can seem pretty scary.
Meta is making huge, long-term commitments based on the idea that AI demand will justify the infrastructure. It appears to be transitioning its business away from the so-called metaverse toward hyperscaler services. That means investors should be prepared for lower margins, perhaps as early as when the company reports second-quarter earnings after the market closes on July 29.
Evercore analyst Mark Mahaney recently told CNBC that he doubts that Meta will attempt to compete head-to-head with Amazon, Microsoft, and Alphabet -- the three largest hyperscalers by market share. Instead, he sees Meta attempting to challenge neocloud providers such as CoreWeave and Nebius Group in offering AI-specific computing products, including AI chips and systems.
Either way, I expect Meta to shed more light on the picture when it reports earnings next week.
