Steve Eisman Warns AI Giants Use Enron-Style Financing

Investor Steve Eisman warned on September 25 that major AI hyperscalers are employing off-balance sheet financing techniques that mirror the accounting fraud seen during the Enron scandal and the 2008 Great Financial Crisis. He argues that companies including Microsoft, Alphabet, Oracle, and Meta are using special purpose vehicles to fund massive AI infrastructure projects without adding debt to their primary balance sheets.

Eisman specifically highlighted Meta Platforms Incorporated's Hyperion AI data center project. The company established Beignet Investor LLC, a joint venture with Blue Owl Capital, to hold $27 billion in debt off its balance sheet. According to Eisman, these maneuvers are designed to prevent credit rating downgrades.

To illustrate the pressure driving these decisions, Eisman cited Oracle, which recently saw S&P Global downgrade its credit rating to BBB-, just one level above junk status, due to high leverage. He characterized these financial strategies as a return of techniques that he believed had disappeared after previous financial debacles.