AI Debt bubble, Space GPUs, & Whales

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THEWHITEBOX

TLDR;

Welcome back! This week, we have a wide range of news, ranging from deploying GPUs into space to new research by DeepSeek that is forcing many in Silicon Valley to rethink how we should build LLMs, with other topics like the growing AI debt bubble or Meta’s massive layoffs.

Enjoy!

DATA CENTERS

Hyperion, A New Giant Data Center

Meta and Blue Owl Capital have formed a joint venture to build a massive data center complex in Louisiana called Hyperion, which is being financed through a $27 billion private debt transaction (the largest of its kind to date).

The structure allows Meta to access capital for its AI infrastructure expansion without issuing new corporate bonds. Blue Owl will hold an 80 percent stake in the project, while Meta retains 20 percent after contributing land and development assets in exchange for roughly $3 billion in cash upfront.

BlackRock has emerged as one of the largest investors in the deal. Its exchange-traded funds purchased over $3 billion of the project’s debt, and one of its active high-yield bond funds committed about $2.1 billion. The debt was issued at around 6.6 percent.

TheWhiteBox’s takeaway:

Regarding the terms of the deal, it’s a bargain for Meta. Considering companies like Coreweave are seeing interests over 12% in their loans, and with discount rates close (or much higher) than 6.6%, and the “risk-free” rate at 4% (10-Y US Treasury Bond), this is free money for Meta (obviously, Meta is a much more reliable borrower than Mr. “Growing via Debt”, aka Coreweave).

To me, this is just a sign of two things:

Big Tech is tapping more and more into debt and less on free cash flows to finance their AI buildouts, while still enjoying excellent deal rates.

This may be an exaggeration, or a hot take, but I believe traditional asset managers like BlackRock are truly desperate for returns at this point, and with nobody wanting to touch the US dollar (or any fiat, for that matter) with a ten-foot pole (hence why every asset is appreciating with regard to fiat).

As this short clip explains in good detail, private credit is becoming a growing concern among investors. And here’s a fun fact for you: there are more PE funds than McDonald’s (19k vs 14k) in the US.

INFRA DEALS

Antropic in $100 billion talks with Google

Anthropic is in negotiations with Google for a cloud-computing arrangement valued at more than $100 billion.

Under the proposed deal, Google would provide Anthropic with access to its advanced tensor-processing units (TPUs) and cloud infrastructure to train and deploy its AI models.

TheWhiteBox’s takeaway:

If this deal materializes, it’s pretty huge.

On the one hand, it’s a massive blow to Amazon, the biggest laggard to date among Big Tech about AI (and paying the price; they are flat for the year). Instead of Anthropic adopting their compute chips, Trainium and Inferentia, Anthropic is going to Google’s TPUs to sign an astronomical $100 billion deal (~the…

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