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There’s a thermonuclear device ticking away in the AI revolution, and it’s a $1.8 trillion shadow debt problem that could make Enron look like a lemonade stand.
If you’re holding the S&P 500 (SPY) — and most of us are — this matters to your wallet right now. The liabilities are piling up in places that don’t show up on balance sheets, and the companies building this AI utopia are quietly burying almost $2 trillion in obligations.
They’re now carrying more leverage than the entire energy sector. The guys writing code for chatbots are more leveraged than the guys drilling for oil two miles deep in the ocean.
When you start hiding what’s actually happening, that’s a problem. And when the music stops and revenue doesn’t materialize, the companies holding the bag aren’t going to be the tech giants — it’s going to be private credit markets, the suppliers building the data centers and pretty much anybody holding SPY.
But don’t panic. There’s a way to play the enablers, dodge the landmines and maybe profit from this massive systemic credit bubble.
The Magic Trick: How $1.8 Trillion Disappeared From Balance Sheets
When Microsoft (MSFT), Amazon (AMZN) or Oracle (ORCL) buys billions of dollars of Nvidia (NVDA) chips, you’d think that shows up as debt. It doesn’t. The illusion starts with $982 billion in purchase commitments — promises to pay that don’t count as liabilities because the chips haven’t been delivered.
Then add $822 billion in lease commitments that haven’t officially started and another $110 billion in unpaid bills stretched from net 30 to net 60 or 90.
Stack those three components together and you get $1.8 trillion in shadow leverage — and it keeps getting bigger, keeps growing. The leverage is getting insane.
The circular financing gets even wilder. Apollo Global (APO) and Blackstone (BX) just raised $35 billion in a chip-backed vehicle for Anthropic. Broadcom (AVGO) is backstopping the deal, Anthropic uses the money to buy Google chips, AVGO makes the chips, Google owns part of Anthropic and lenders are financing investors who then finance the purchases.
If demand needs to grow, new chip buyers can effectively be manufactured by financing the buyers themselves.
How to Navigate a Market Built on Circular Credit and Accelerating Leverage
The playbook is simple: picks and shovels plus strategic hedging.
First, the dealers. AVGO collects fees on every side of the transaction. APO and BX get paid to structure, fund and recycle this credit. As long as the carousel spins, they win.
Second, the power grid. Data centers run on electricity no matter what the AI models produce. Vistra Energy (VST), Constellation Energy (CEG) and Quanta Services (PWR) get paid in real cash, not future AI tokens.
Third, the defensive side. In a credit-fueled AI bubble, you actively bet against the companies destined to get crushed by depreciation. ORCL’s 189% CapEx‑to‑sales setup is a flashing red warning sign.
All this spending sits in construction in progress, untouched. But once the servers flip on, depreciation slams into the income statement. Analysts estimate roughly $520 billion in cumulative depreciation hitting MSFT, ORCL, META and Google over the next three years. If their AI revenue doesn’t absolutely explode, their margins will collapse and even giants like META or AMZN could face flat or negative cash flow.
The ultimate wild card is global competition. Companies may balk at their AI bills when they realize China is releasing open‑source models that run at a fraction of the cost. If token prices fall because of cheaper overseas alternatives, the revenue assumptions propping up that $1.8 trillion evaporate — and chip‑backed loans go bad fast.
You can see the setup forming. It’s the same feeling people had before the housing crisis. You can spot the problem. You just don’t know when it’s going to hit.
Jeffry Turnmire
Jeffry Turnmire Trading
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I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. 3 Tickers Are Leading the Charge for the Next Couple of MonthsÂ
Don’t let the headlines fool you, you don’t need the market moving upward to target cash.
Over the next couple of months, I’ll be targeting three tickers for trade opportunities no matter what the overall market does.
Want to see what they are?
