Moody’s flags $662 billion risk at the heart of the data center build-out by just 5 companies

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The technology sector’s frantic race to build artificial intelligence infrastructure has created a massive, financial overhang. According to a recent in-depth report by Moody’s Ratings, the top five U.S. hyperscalers have accumulated $662 billion in future data center lease commitments not yet begun that are not current liabilities and therefore sit entirely off their balance sheets. As those leases begin over the next several years, and as landlords’ obligations are fulfilled, that more than half a trillion dollars’ worth of data center activity will be recorded on balance sheets.

The report, which analyzed the financial disclosures of Amazon, Meta, Alphabet, Microsoft, and Oracle, highlights how the unprecedented build-out of AI data centers is straining traditional accounting metrics. As of the end of 2025, these five tech giants had amassed a staggering $969 billion in total undiscounted future lease commitments, or data centers that have yet to be built. However, more than two-thirds of this total, that $662 billion figure, is for leases that have yet to commence, meaning that under generally accepted accounting principles, or GAAP, these companies are not required to recognize these massive obligations on their current balance sheets.

What is going on with these leases?  The root of this accounting phenomenon lies in the unique nature of AI hardware and the rules governing corporate leases. Historically, U.S. data center leases spanned 10 to 15 years. But because the cutting-edge semiconductor and technology equipment required for AI typically has a useful life of just four to six years, hyperscalers are demanding shorter initial lease terms with options to renew. And “to make the investment case for landlords,” the note explains, “these structures are often backstopped by a significant off-balance-sheet guarantee from the lessee.”

Moody’s warned that these opaque accounting practices mask the true economic risk facing the tech industry. While leasing reduces upfront capital investments, carrying such massive future commitments severely limits a company’s financial and operating flexibility, especially if AI industry conditions change rapidly. Because these liabilities are hidden, Moody’s concluded, in its own jargony way, that it is considering new ways to look at this issue.