Build, Lease or Partner
Hyperscalers acquire capacity by building it, leasing it from developers or buying it as a service from neoclouds, and increasingly by mixing all three through joint ventures and hybrid arrangements. The route changes what appears in capital expenditure, whose name appears in local filings and whose balance sheet carries the risk. Faraday's read is that the growth of leasing and partnering since 2024 is partly a hedge against the companies' own uncertainty about demand. The durable skill is tracking a small set of disclosures every quarter, capex, leases not yet commenced, contracted demand and partner contracts, and paying most attention when they begin to diverge.
Knowledge check
How does a hyperscaler's choice to lease or to buy capacity from a neocloud change what appears in its capital expenditure?
Show the answer
When a company self-builds, the building and equipment appear in capital expenditure. When it leases a building on operating terms, the building appears as a lease commitment instead, and when it buys capacity from a neocloud, the partner finances the building and chips while the hyperscaler records a contract. Two companies with similar capacity can therefore report very different capex.