FOURWEEKMBA EXPLAINER ยท FROM THE NEWSROOM ยท UPDATED 1 NOVEMBER 2026
Free to share with a link to this page. Alphabet and Meta figures from their 10-Q filings for the quarter to 30 September 2026; the $133.4 billion total is our arithmetic.
The short version: the biggest AI builders increasingly put new data centres inside a separate company. Partners and bond buyers fund most of the build, the tech company signs a lease to rent the campus, and it promises to cover part of any loss if the campus is worth less when it walks away. The debt sits on the separate company’s books, not the tech company’s. The promise does not disappear: it shows up as a lease commitment or a guarantee in the notes to the accounts.
Two companies disclose that kind of promise at scale. Alphabet lists $91.9 billion of data-centre backstops and power-equipment guarantees and Meta $41.5 billion of residual value guarantees, both at 30 September 2026 (our analysis of the 10-Qs). Meta’s maximum exposure to its two data-centre ventures reached $68.40 billion, up 49% in nine months (Meta 10-Q).
1 ยท Big Tech tenant (Meta)Starts the campus, then contributes land and work in progress ($4.30B) to a new venture. Takes $2.55B back in cash and keeps a 20% stake.
↓ signs a leaserent flows down from 2029 ↓
2 ยท Lease + residual value guaranteeFour-year lease terms, renewable up to 20 years; initial commitment about $12.31B. If Meta leaves and the campus is worth less, Meta pays the shortfall up to a threshold of about $28B (first 16 years).
↓ the lease is the collateral↓
3 ยท Special purpose venture (the “SPV”)Owns the campus; total estimated development cost about $27B. Meta manages construction and property for it but, by its own judgment, does not control it, so it does not consolidate it.
↑ equity and debt fund the build↑
4 ยท Lenders and equityFunds managed by Blue Owl own 80% and put in about $7B of cash. Beignet Investor, a Blue Owl vehicle, sold $27.3B of bonds at 6.581% due 2049, rated A+ by S&P, one notch below Meta; Pimco anchored.
Hyperion structure, simplified. Sources: Meta 10-K FY2025 and 10-Q Q3 2026 (Note 5), Meta release of 21 Oct 2025, IFR.
Why it stays off the balance sheet. Each venture is a variable interest entity. Under US accounting rules the company with the “power” to direct what most affects its economics must consolidate it. Meta says remarketing the campus (finding new tenants, selling buildings) is that activity, and that it does not control it: “As we do not have the power to direct the activities that most significantly impact each Venture’s economic performance, we are not the primary beneficiary for either Venture and, therefore, do not consolidate.” It adds that “RVG payments are not probable, and therefore no liability has been recorded to date” (10-Q Q3 2026).
The same idea, other shapes. Alphabet does not form ventures; it backstops the leases and energy bills its data-centre partners owe, for up to 15 years, keeping “the right to assume the underlying leases” if a partner defaults. Nvidia and AMD give credit support behind campuses that a customer will rent. Neoclouds such as CoreWeave mostly borrow on their own balance sheets, and SpaceX has agreed a finance lease of GPUs from an Apollo-managed lessor, which stays on its books.
The deals
Thirteen arrangements from our newsroom’s sourced coverage. Amounts are what each source states; they are not comparable with each other (a guarantee cap, a development cost and a loan are different things).
Company
Partner / lender
Amount
Structure
MW
Date
Source
Meta: Louisiana Venture (Hyperion)
Funds managed by Blue Owl (80%); Beignet Investor bonds, Pimco anchor, Morgan Stanley sole underwriter
~$27B development cost; $27.3B bonds at 6.581% to 2049
Off balance sheet: unconsolidated venture, Meta 20%, leaseback from 2029, residual value guarantee ~$28B
2.3 GW load for Entergy’s plants; Meta says “scaling toward 5 gigawatts”
“—” in the MW column means no megawatt figure in the sources listed for that row; it is not a claim that none exists. Scroll the table sideways on a phone.
Most of the rise is the new Texas venture’s guarantee and lease, layered onto Louisiana’s. Meta 10-K FY2025 and 10-Q Q3 2026, Note 5.
Why it matters
The debt moves off the debt line, not off the hook. S&P rated the Beignet bonds A+, one notch below Meta, because the deal passes “substantial credit risk to Meta during both construction and operation phases”, as IFR reports it. In an IFR opinion piece, Prasad Gollakota, a former UBS capital-solutions co-head, argues the debt is economically Meta’s, because the guarantee gives Meta an incentive to keep renewing four-year leases.
It is not cheaper money. The Beignet bonds pay 6.581%; Meta’s own May 2026 notes carry stated coupons of 4.55% to 6.45% (10-Q). Lenders price these deals off the tenant: GPU-backed loans run about 6% with Microsoft or Meta as renter and about 9% without (our report).
Disclosure gives a ceiling, not a probability.Meta pays only if it decides to “terminate or not renew a lease” and “certain other conditions” are met; the filings value neither campus, so outsiders cannot price the expected loss. As we read it, the loss path is: AI demand or Meta’s plans change, Meta exits at a four-year break, and a single-tenant, gigawatt-scale campus cannot be re-let at its guaranteed value.
Credit markets are watching. S&P turned Meta’s outlook negative on 30 October as capex topped operating cash (our report), and the WSJ reported the cost of insuring Amazon, Alphabet, Microsoft, Meta and Oracle debt at its highest since 2021 (our report). Reuters reported that CoreWeave’s default-insurance cost of around 1,000 basis points implies a nearly 63% chance of default within five years (Reuters).
Private credit is the funding pool. The World Bank expects US$800 billion of AI capex in 2025-2028 to be financed by private credit, and puts AI-related lending at 34% of private credit activity in 2025 (World Bank).
Local costs outlast the lease. Entergy Louisiana’s three gas plants for Hyperion were approved 4-1 by the state regulator; Meta covers 100% of plant costs under a 15-year deal (WWNO), shorter than the 16-year guarantee and the bond running to 2049.
FAQ
What does “off balance sheet” mean for a data centre?
The campus and the debt that paid for it sit in a separate company the tech firm does not consolidate. The tech firm reports only its stake, its lease commitments and any guarantees, in the notes. Meta’s venture debt, for example, was issued by Beignet Investor, a Blue Owl vehicle, not by Meta.
What is a residual value guarantee?
A promise from the tenant to cover the gap if the property is worth less than an agreed threshold when the tenant leaves. Meta’s guarantees cap at $41.49 billion across its two ventures at 30 September 2026; it has recorded no liability because it judges payment “not probable”.
Is this legal?
Yes. It follows US GAAP consolidation rules, which turn on who has “power” over a venture’s key decisions. Meta discloses the judgment and the maximum exposure in its filings. Critics such as IFR’s columnist argue the economics are still Meta’s.
How big is it across Big Tech?
Alphabet and Meta disclose up to $133.4 billion of contingent support for data-centre and power partners (our arithmetic). Leases signed but not yet started are larger: Meta lists $355.73 billion, and our tracker puts Big Tech’s off-book commitments at $3.94 trillion (our report).
Do Microsoft, Amazon and Oracle do the same?
Our newsroom’s full-text search of their latest 10-Qs found no comparable guarantee. They carry the commitment as large leases not yet started instead: $364.6 billion at Microsoft, $164.9 billion at Amazon and $288 billion at Oracle (our report).
What would make the guarantees pay out?
For Meta, a decision not to renew a lease plus “certain other conditions” the filing does not spell out, with the campus worth less than the threshold. For Alphabet, “specified default scenarios by underlying parties”, in which case it can take over the leases or sublease them.
Built from the FourWeekMBA newsroom’s sourced facts and its research on the Meta and Blue Owl structure. When Alphabet, Meta, Nvidia or the others file new quarterly numbers, or a new deal is reported, our newsroom covers it and this page is updated with the new figure and date. Figures marked “our arithmetic” are our own sums or ratios from the cited filings.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
