Who's paying for the AI build-out?

Every fact carries a tag:

• Verified checked in the linked official source (not audited by us)
• Reported a company's plan, a preliminary figure, or news coverage we haven't matched to an official document
• Estimated our own calculation, or a value that isn't certain

This is our first issue, so everything below is a starting line. Some of it happened before October; it's here because you need a baseline to see what moves. Next month, we'll show you what did.

Alphabet spent more than it made. For one quarter.

Start with Google's parent company. In the second quarter, Alphabet's business brought in $39.069 billion in cash from operations. It spent $44.924 billion buying property and equipment. Verified

Subtract one from the other and you get free cash flow: negative $5.855 billion. Three months earlier, it was positive $10.116 billion. (Free cash flow is Alphabet's own non-GAAP measure: operating cash minus capital spending.) Quarterly reconciliation ↗

That's why the period matters. "Alphabet's cash flow turned negative" is true. Leave out the word "quarter" and it tells a much darker story than the filing does.

Companies spend like this because customers are signing up. So how big are those sign-ups, and how much of it is real money yet? Amazon's filings show the scale ↓

$496 billion of promises

Amazon reports a number most people never look at: the commitments customers have signed for future services, on contracts originally longer than a year, mostly for AWS. Verified

At the end of 2025 it stood at $244 billion. By March 31, $364 billion. By June 30, $496 billion. That's more than double in six months ($496B ÷ $244B ≈ 2.03). Estimated Year-end filing ↗ March ↗ June ↗

Two very large customers explain part of the jump. The June filing describes OpenAI expanding its commitment in the first quarter by $100 billion over eight years, on top of an existing $38 billion arrangement, and Anthropic expanding in the second quarter by more than $100 billion over ten years. Verified Note 1 ↗

A promise to buy and money already collected are different things. A big order book answers the first question. It doesn't answer the second.

Building at this scale takes financing, so we also watch private credit: funds that lend outside the banks. This summer, investors in one of them asked for their money back. Not everyone got it ↓

Investors asked BCRED to buy back 191.8 million shares. It took about half.

BCRED is a broad private-credit fund. Every quarter it holds a "tender": a scheduled chance for investors to ask the fund to buy back their shares. In the second-quarter round, investors asked to sell 191,782,834 shares. The fund accepted 93,100,272: 48.54% filled, 51.46% not. Estimated Verified Final results, filed August 4 ↗

That was a real limit on withdrawals, not a rule that might someday apply. The fund paid out roughly $2.201 billion on or about July 29, after the early-repurchase deduction where it applied. Verified Payment details ↗

The next round is already underway. In a September 3 update, BCRED estimated third-quarter requests at about $4.3 billion, roughly 10% of shares outstanding, and said it would fulfill requests representing 5%. Reported Those are preliminary. The final dollars come in November, and an unfinished record doesn't cancel the completed second-quarter shortfall. Q3 update ↗

Money comes in from investors and goes out to builders. But who's on the other side of all those cloud contracts? For some companies, it's a very short list ↓

Three customers, 72% of the business

CoreWeave sells AI computing capacity. In the second quarter of 2026 (April through June), its three largest customers accounted for 36%, 26% and 10%. Together that's 72%, leaving 28% for everyone else. Estimated Verified Customer disclosure ↗

The filing labels them A, B and C, and warns that the letters can refer to different customers in different periods. So we don't attach company names to them.

NVIDIA's two buckets

NVIDIA turns up on both sides of these deals. Two numbers from the same filing look alike but aren't.

As of July 26, NVIDIA reported $36 billion in AI-cloud partner agreements: partners buy NVIDIA's equipment, and NVIDIA commits to buy cloud services from them, a commitment that shrinks as that capacity is used, by third parties or by NVIDIA's own research. Separately, it lists $29 billion in cloud-service agreements for its own research and development. Verified

Sources: MD&A and Note 10 ↗ Note 10 ↗

Two different categories, not two estimates of the same bill, and neither is revenue already earned. Switch between them from one quarter to the next and you can manufacture a trend that isn't there.

Cash, contracts, customers: so far it's all on paper. But data centers have to be built somewhere, and that takes permission ↓

A contract for capacity isn't a permit to build it

Every number so far assumes the buildings actually get built. That takes power, water and permission, and in 2026 states started saying "not yet".

New York: a moratorium bill, then an order instead

1. June 4, 2026Bill A11560 passes both houses Verified

   The "responsible data center development act" would:

   • stop state permits for large data centers (20 megawatts or more) for one year;
   • order a state report on their electricity use and the water their cooling loses to evaporation;
   • make utilities create a separate rate class for large data centers;
   • set renewable-power targets, rising to 90% from 2040;
   • require public hearings in host communities.

   Its action list ends with "RETURNED TO ASSEMBLY": it was never delivered to the governor, signed or vetoed. Bill and actions ↗

2. July 14, 2026Executive Order 62 Verified

   It covers data centers of 50 megawatts or more, with exclusions. It pauses state environmental-permit applications not already determined complete, until a specified environmental report and findings are done. Local-government permits are excluded from that provision. Order, sections 1 and 6 ↗ A law firm's client update describes the order as issued "instead of acting on the legislation." Reported Client update ↗

Texas: a pause by letter, not by law

Texas's pause comes from the governor's letters, not from a law. In order:

1. June 20, 2025Senate Bill 6 signed Verified

   Large loads (75 megawatts or more, unless the regulator sets a lower threshold) pay study fees and follow new grid-connection standards. Separately, large customers on the transmission grid that connect after 2025 must be able to be cut off in a grid emergency: they must "install equipment that allows the load to be curtailed during firm load shed." Bill analysis ↗ Signed June 20, 2025 ↗

2. August 3, 2026The governor orders a grid audit Verified

   The state's utility regulator and grid operator are to review the data centers waiting to connect "before any additional data centers are approved to move forward." Governor's letter ↗

3. September 21, 2026Environmental permits paused Verified

   The state environmental agency is told to "pause the issuance of all permits related to data center projects until ERCOT completes its review." Governor's letter ↗

Oregon: a pause requested until mid-2027

On October 9, 2026, Oregon's governor asked the state environmental agency to "pause processing and issuance of air or water discharge permit applications until July 1, 2027" for new or expanded data centers. Verified Governor's letter ↗

And closer to home

The pushback isn't only in state capitals. Data Center Watch, a tracker of local opposition, counted at least 75 projects, about $130 billion, blocked or delayed in the first quarter of 2026, and at least 45 projects, $68 billion, in the second. Reported Its totals combine "blocked" with "delayed", so they are not lost investment. Q1 2026 ↗ Q2 2026 ↗

So who's paying for the AI build-out? Customers, through contracts. Shareholders, through cash flow. Investors, through funds. And whether any of it gets built depends more and more on the neighbors saying yes. Here's what to watch next ↓

What we're watching next

These dates add appointments to the watchlist. They aren't new evidence by themselves.

1. Oct 28 · 4:30 p.m. ETAlphabet's third-quarter results call Verified Announcement ↗

   Does the second-quarter cash gap close, or grow?

2. Oct 30 · 11 a.m. ETDominion Energy's third-quarter call Verified Calendar ↗
3. Nov 2 · 2 p.m. ETThe Fed's bank-lending survey Verified Fed calendar ↗
4. Nov 18 · 2 p.m. ETMinutes of the Fed's October 27–28 meeting Verified Fed calendar ↗
5. December · no date yetOracle Estimated Investor calendar ↗

   A monitoring window, not an appointment. Oracle's investor-events page currently says "There are no events scheduled", so we don't treat December 14 as announced.

Ten things we track, every issue

"Change documented" means the named event is on the record, not that an investment is good or bad. "Not assessed" is a gap, not an all-clear.

Contracts, cash, withdrawals, permits: each answers a different question. We keep them separate, and we keep the reporting period next to every number. Next month, we'll show you what moved.

Suggest a topic for The Dissection, or send a question or correction: hello@c13m.com

Sources

Sources cited in this issue: official documents first, then news coverage and trackers. Reporting cutoff: October 18, 2026 (section 05: October 19, 2026). Every link opens the original document in a new tab.

1. Alphabet: Q3 2026 results call announcementabc.xyz
2. Dominion Energy: Q3 2026 callinvestors.dominionenergy.com
3. Federal Reserve: November 2026 calendarwww.federalreserve.gov
4. Alphabet: Q2 2026 results and free cash flow reconciliationwww.sec.gov
5. BCRED: final Q2 tender resultswww.sec.gov
6. BCRED: September 3 update (Q3, preliminary)www.sec.gov
7. Amazon: 10-K for 2025www.sec.gov
8. Amazon: 10-Q, Q1 2026www.sec.gov
9. Amazon: 10-Q, Q2 2026www.sec.gov
10. CoreWeave: 10-Q, Q2 2026www.sec.gov
11. NVIDIA: 10-Q for the quarter ended July 26, 2026www.sec.gov
12. New York: bill A11560 actionswww.nysenate.gov
13. New York: Executive Order 62www.governor.ny.gov
14. Oracle: investor eventsinvestor.oracle.com
15. Meta: Q2 2026 resultswww.sec.gov
16. Microsoft: FY2026 Q4 earningswww.microsoft.com
17. Ares Capital: Q2 2026 resultswww.sec.gov
18. Fitch: U.S. private credit default rate methodologyassets.fitchratings.com
19. Micron: 10-K for fiscal 2026www.sec.gov
20. New York: bill A11560, text and actionswww.nysenate.gov
21. Texas: SB 6 bill analysiscapitol.texas.gov
22. Texas: SB 6 historycapitol.texas.gov
23. Texas: governor's letter on the grid review, August 3, 2026gov.texas.gov
24. Texas: governor's letter on environmental permits, September 21, 2026gov.texas.gov
25. Oregon: governor's letter on data-center permits, October 9, 2026 (copy hosted by OPB)www.opb.org
26. Gallup: Americans oppose data centers in their areanews.gallup.com

News coverage and trackers

1. Davis Polk client update on New York's orderwww.davispolk.com
2. Data Center Watch: Q1 2026datacenterwatch.org
3. Data Center Watch: Q2 2026datacenterwatch.org
4. Tucson city council vote (local news)www.azfamily.com
5. St. Charles one-year ban (local news)www.stlpr.org
6. College Station land-sale vote (local news)www.kbtx.com
7. San Marcos rezoning vote (local news)spectrumlocalnews.com