June 19, 2026

Galbraith’s bezzle resurfaces amid AI investment frenzy

On June 19, 2026, a commentary highlighted the growing financial risks within the AI sector, which mirror the concept of “bezzle” coined by John Kenneth Galbraith. This term refers to undiscovered embezzlement or financial irregularities, particularly exacerbated in periods of economic optimism, such as the current AI investing frenzy. The enthusiasm for AI has led to inflated earnings reports among tech giants like Alphabet and Amazon, partly through extended depreciation schedules for AI hardware that may misrepresent true profitability. As the interconnected funding among tech firms and their investments in AI startups proliferate, analysts express concern that approximately $1.8 trillion in liabilities are being kept off balance sheets, compounding the potential for financial instability in this rapidly expanding sector.

G42: G42 is an Abu Dhabi-based artificial intelligence and technology group. It previously held a stake in a chipmaker that later completed an initial public offering.
xAI: xAI develops artificial intelligence systems with a focus on understanding the universe. The company was acquired by SpaceX in a transaction that preceded related computing rental agreements with other tech entities.
Amazon: Amazon operates extensive cloud infrastructure via Amazon Web Services and engages in various technology investments. The company participates in funding rounds for AI leaders and supplies cloud capacity in return.
Nvidia: Nvidia designs and manufactures graphics processing units and related technologies essential for AI training and inference. It maintains ownership stakes in AI infrastructure firms and benefits from demand tied to major AI developers.
OpenAI: OpenAI develops advanced artificial intelligence models and applications, including ChatGPT. The organization features prominently in discussions of interconnected investments and vendor relationships within the AI sector.
Alphabet: Alphabet is the parent company of Google, operating in search, cloud computing, and AI research through its Google Cloud division. Its earnings have reflected unrealized gains from investments in AI companies like OpenAI and Anthropic.
Blue Owl: Blue Owl is a private credit and alternative asset manager. It operates a variable interest entity used to finance a large data center project associated with Meta Platforms.
Broadcom: Broadcom produces semiconductors and connectivity components used in data centers and AI systems. It has established a special purpose vehicle involving private equity partners to provide computing capacity to AI companies.
Anthropic: Anthropic builds large language models and AI systems with an emphasis on safety. The company receives funding and cloud commitments from major technology firms active in the AI space.
CoreWeave: CoreWeave provides specialized cloud infrastructure tailored for AI and graphics-intensive workloads. Nvidia holds a notable equity position in the firm, which serves as a key customer for its hardware.
Microsoft: Microsoft is a leading technology company that provides cloud computing, software, and hardware solutions, including its Azure platform. In the current AI environment, the firm has made substantial investments in OpenAI while securing commitments for its cloud services from the startup.
Blackstone: Blackstone is a global investment firm active in real estate, private equity, and infrastructure. It has backed special purpose vehicles that facilitate computing capacity for leading AI organizations.
Gerard Minack: Gerard Minack is an independent market strategist who analyzes macroeconomic and corporate financial trends. His commentary highlights the impact of sustained capital spending on the cash generation of major technology companies.
Michael Burry: Michael Burry is an investor known for identifying risks in asset valuations. He has publicly questioned the depreciation accounting used by hyperscalers for AI chips, suggesting it may overstate current profits.
Meta Platforms: Meta Platforms develops social media platforms and invests heavily in AI capabilities and infrastructure. It has pursued large-scale data center projects funded through specialized vehicles that keep certain liabilities off its primary balance sheet.
Cerebras Systems: Cerebras Systems designs specialized chips optimized for AI workloads. Prior to its recent public listing, the firm generated significant revenue from contracts linked to an Abu Dhabi-based AI initiative.
John Kenneth Galbraith: John Kenneth Galbraith was an influential economist who analyzed financial bubbles and corporate practices in works such as his book on the 1929 crash. His concept of the bezzle is applied in the article to examine accounting practices during the present AI expansion.
Apollo Global Management: Apollo Global Management is a major alternative asset manager focused on private equity and credit strategies. It participates in financing vehicles supporting AI infrastructure deployments.

Accounting Practices: Investor commentary has focused on the potential effects of extended depreciation schedules for AI hardware on the reported earnings of major cloud providers.
Circular Investment Trends: Leading technology companies continue to engage in interconnected funding and service commitments with AI startups to support their respective ecosystems.
Off-Balance Sheet Financing: Hyperscalers have increasingly turned to off-balance sheet arrangements and partnerships with private credit firms to fund AI infrastructure expansions.

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