AI Bubble: How Google Outsources Financing Risks

Google, together with chip designer Broadcom, investment firms Apollo and Blackstone, and several banks, has created a complex financing architecture to sell as many of its Tensor Processing Units (TPUs) as possible, preferably without these financial transactions appearing on its own balance sheet. A large portion of the TPUs go to Anthropic. The contracts, which rely on this AI company meeting its payment commitments, total around $200 billion. According to the Financial Times, Google sells its TPUs to partner Broadcom, which sells them to a specially created organization called Compute SPV. This entity borrows money from Apollo and Blackstone to buy the chips and leases them to Anthropic. If Anthropic defaults on payments to Compute SPV and Compute SPV can't service its loans even after reselling the chips, Broadcom guarantees it will cover $30 billion of the $35 billion circulating in the current round. This structure could serve as a template for the additional 3.5 gigawatts of TPU hardware that Google, Anthropic, and Broadcom have agreed to purchase. The setup resembles financing patterns used by Boeing and GE to sell airplanes and engines. In addition to chip financing, Google wants to secure enough electricity and data centers for its TPUs, partnering with former crypto miners with surplus capacity. TeraWulf was the first operator to build a 360-megawatt data center expansion in upstate New York with a Google guarantee, which underwrote lease payments for the Anthropic site. Morgan Stanley structured $3.2 billion in construction bonds for the project, and Google received penny warrants on a stake in TeraWulf. Google extended this model to other projects with Cipher Digital and Hut 8 in Texas and Louisiana. The Financial Times identified ten projects totaling 2.4 gigawatts that Google backstops. Google risks up to $44 billion in guarantees if all leases fail, yet only reports $815 million on its balance sheet. These dimensions fit the broader investment race: Nvidia recently negotiated a $250 billion guarantee for OpenAI, and big tech companies have invested over a trillion dollars in AI expansion amid growing doubts about the boom's long-term viability.