QTS Hillsboro data center buildings, Hillsboro, OR, USA Credit: Hrach Hovhannisyan via Shutterstock.com A memo from US law firm Quinn Emanuel sets out how the debt behind the AI data centre boom could turn into a wave of lawsuits. Liz Hoffman reported that it was doing the rounds again this week for Semafor. The 20-page client alert was first published in\u00a0March. It is unusual because it names specific deals, Hoffman wrote.<\/p>\n
Deals under the microscope One is a data centre in upstate New York leased by AI cloud firm Fluidstack, with Google backing the lease. Google\u2019s guarantee only starts once building is finished, the memo notes, so a delay could leave lenders exposed. It also looks at the financing behind Meta\u2019s giant\u00a0Hyperion site\u00a0in Louisiana, CoreWeave\u2019s loans backed by its GPUs, and Oracle\u2019s off-balance-sheet leases. When chips lose value The core worry is that AI chips lose value fast.<\/p>\n
If the GPUs used as collateral are worth less than the loans, lenders could fight over who gets paid. Because many deals are linked, one default could spread to others. The firm calls this a risk of cascading insolvencies. It likened GPU-backed lending to \u201cusing one\u2019s credit card to pay off the debt on another credit card.\u201d Hoffman noted that Quinn Emanuel is a litigation firm.<\/p>\n
If the deals go wrong, it stands to win the court work. The memo adds to a growing debate about how much AI debt sits\u00a0off company balance sheets.<\/p>\n","protected":false},"excerpt":{"rendered":"
QTS Hillsboro data center buildings, Hillsboro, OR, USA Credit: Hrach Hovhannisyan via Shutterstock.com A memo from US law firm Quinn Emanuel sets out how the debt behind the AI data centre boom could turn into\u2026<\/p>\n","protected":false},"author":1,"featured_media":25817,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-25816","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/25816","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/comments?post=25816"}],"version-history":[{"count":0,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/25816\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media\/25817"}],"wp:attachment":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media?parent=25816"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/categories?post=25816"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/tags?post=25816"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}