Big Tech AI Spree Revives Accounting Devices That Toppled Enron

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Deep Dive<br>Big Tech AI Spree Revives Accounting Devices That Toppled Enron<br>July 21, 2026, 8:45 AM<br>By Amanda Iacone<br>Graphics by Irfan Uraizee

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Enron Corp. exploited US accounting rules to hide from investors and lenders hundreds of millions in debt it had bundled into off-balance sheet entities — obligations that contributed to one of the biggest corporate collapses in US history.<br>Twenty-five years later, new risks have emerged as some of the world’s most valuable companies create similar financing vehicles that can mask how much debt they’re taking on, as the technology industry looks to spend more than $3 trillion to power artificial intelligence systems.<br>Tech companies are leaning on these arrangements to package debt tied to billions in assets with an uncertain return — including chips, servers, and energy equipment — while spreading those risks among developers, vendors, and lenders. Substantial infrastructure costs tied up in the financing structures aren’t flowing through the parent company’s financial statements, offering unaware investors a rosier view of performance and leverage.<br>“The accounting treatment itself is in fashion. But what if one of these companies was a house of cards and was propping itself up with this accounting treatment?” said Tom Selling, technical accounting consultant. “To me, that’s the risk.”<br>Alphabet Inc. and Meta Platforms Inc. each have turned to vehicles known as variable interest entities (VIEs) as part of the financing mix needed to construct data centers and related energy infrastructure.<br>Meta, the parent of Facebook, last year formed a joint venture, a VIE, to build a Louisiana data center through a partnership with Blue Owl Capital. The social media titan’s maximum exposure for the venture is $46 billion, according to its filings with the Securities and Exchange Commission. The company announced last week that it would expand its planned campus and is expected to spend as much as $250 billion on the project, Bloomberg News has reported.<br>Alphabet, Google’s parent company, keeps VIE arrangements for leases and credit backstops for data centers along with other guarantees related to power infrastructure off its balance sheet.<br>AI financing arrangements can take many forms and may require different accounting.<br>Microsoft Corp. provides few details about its VIEs, only stating that it doesn’t consolidate those entities.<br>Alphabet, Meta, and Microsoft declined to elaborate beyond their recent SEC filings detailing how they apply US accounting rules in response to questions about their AI financing and any off-balance sheet arrangements. They declined to answer or didn’t respond to questions about how the Enron scandal influences modern accounting.<br>The nature of the financing deals give tech companies the option to walk away, for a price, if they don’t ultimately need the data capacity in the future. High-powered computer chips underpinning those investments have an uncertain shelf life. Development of more powerful chips or demand that falls short could render the complexes obsolete.<br>Whether corporate managers consolidate these arrangements, or record another entity’s debt on the balance sheet, is one of the most difficult judgment calls in accounting. Auditors highlighted Meta’s assessment whether to consolidate its Louisiana data center, noting the “significant judgment” involved.

Accounting for AI<br>Enron had tried to take advantage of Financial Accounting Standards Board guidance that at the time allowed companies to avoid booking side arrangements on the balance sheet if those deals involved a small equity stake from a third party.<br>Accounting for those complex arrangements has evolved since then, imposing constraints to curb abuses of the off-balance sheet treatment. Companies must give investors more details in the financial statement footnotes about the nature of the entities and their exposure.<br>Modern lease accounting rules also provide investors with a forecast of certain significant lease commitments related to data centers that could eventually pad their balance sheets and hit cash flows.<br>Oracle Corp., for example, has agreed to backstop another entity’s lease for up to $3.3 billion. The database management company has $260 billion of future lease commitments mostly for data centers that will eventually roll onto its balance sheet, according to its SEC filings. Ratings agency S&P Global downgraded Oracle’s credit earlier this month due in part to its “stretched leverage.”<br>Chipmaker Nvidia has inked arrangements with its vendors, with a reported $119 billion in future purchase obligations in its most recent SEC filings, to advance AI infrastructure. The company announced in March a multibillion-dollar purchase commitment for optics technology and a related investment.<br>Purchase and computing...