CDO

Compute Debt Obligation

Understand how the compute circlejerk works.

Play Cold Chain New · a browser game How it works

Ceedo, the CDO cat, in three dimensions, holding a graphics card. Click or press the arrow keys to change his face.

Open on X ↗

Him
Him @himgajria

Wait until they issue collateralised debt obligations, where the collateral is compute earning rent, but that compute ages as new technology is introduced, making the rent inefficient and the CDOs inevitably default.

Compute Debt Obligations.

Last edited 3:32 PM · ·19.5K Views

01 / Map

AI Capital Loop

Nine companies and the thirteen legs of money reported between them. Each leg links to the filing or announcement it comes from.

9 entities / 13 links

02 / Model

Ceedo

Character model sheet, v1.0. Pick a face and every Ceedo on the page wears it.

03 / Structure

Structure your own CDO

Choose whose contracted obligations go in the pool, cut it into three tranches, and stress it.

The waterfallholding

Concentration is the share of the pool owed by its largest payer. Circular collateral is the share paid by companies that are themselves funded from inside the loop.

Collateral

Stressauto

04 / Analyze

What the last dollar earned

Pick a company and a year. What it spent on capacity, what extra profit came back, and whether the new money earned its keep.

The worksheetclears

Microsoft · NASDAQ: MSFT · FY ended 30 June 2026

Spent on capacity

FY2026 $M
140,556

Tick a line out and the answer moves.

Additions to property and equipment FILED 115,948 Consolidated Statements of Cash Flows.
Capital out the door 140,556

Extra profit, after tax

$M
21,528

How much more than the year before.

Operating income, FY2026 FILED 155,237
Operating income, FY2025 FILED 128,528
Change DERIVED 26,709
Effective tax rate · 32,185 / 165,934 DERIVED 19.4% Provision for income taxes over income before income taxes.
Change in NOPAT · 26,709 × (1 − 32,185 / 165,934) DERIVED 21,528

What the new money earned

return 21,528  ÷  capital 140,556

15.3%

4.7 points clear of the band

No company files this number.

Against what the money cost

The tall tick is what the filing earned. The short one is the figure that gets quoted. The band is what the money cost.

9.3–10.7% hurdle
As quoted 24.9% AUTHOR
As earned 15.3% DERIVED

Microsoft's newest capital earned 15.3% against a 9.3–10.7% hurdle band, clearing it by +6,545 to +8,400. The 24.9% that gets quoted sits between the two readings these lines produce: 25.3% over last year's capital, and 24.4% over a denominator near $88B that appears on no statement. Switch the basis to lagged for the first of them.

More on this reading
Economic profit on the increment 21,528 − hurdle × 140,556 +6,545 to +8,400
Capital ceiling at this increment 21,528 ÷ 10.66…9.34% $202.0B to $230.5B · deployed $140.6B

The band is US technology WACC, Damodaran (NYU Stern), January 2026, held at one value and one date across all four worksheets so they can be read against each other, which makes it the wrong band for each taken alone. The same dataset puts restaurant and dining at 7.16%: on that band McDonald's FY2024 is 5.3 points short rather than 7.5, and FY2025 clears by 8.7 rather than 5.2. Cisco FY2000 is read against a 2026 band rather than the higher cost of capital of 2000, which is the conservative reading. No company publishes its own cost of capital. Concurrent divides by this year's spend, lagged by last year's; at Microsoft the two are ten points apart.

Working notes

Two choices decide the answer and the filing prints neither. The first is what counts as capital: cash capital expenditure is one line in the cash flow statement, and right-of-use assets obtained for finance leases are a different line in the lease note, $24.6B at Microsoft. Cisco is the extreme case. Its FY2000 cash capital expenditure was $1,086M while its invested capital rose $15.8B, because most of the capital arrived as stock issued for acquisitions. The second choice is which year's spend to divide by. Tick the lines and a quoted number moves ten points without anybody lying.

Not used here. Three figures travel with this argument and appear as no ledger line on this page, because none reconciles to a filing. Cisco's "$16 billion invested against a $426 million loss": the $16 billion reconciles, the loss does not, and FY2000 operating income was a positive $3,235M. Cisco's headline returns of "121% / 37%": no such figures appear in its filings. McDonald's "28% blended ROIC": McDonald's publishes no ROIC, and third-party estimates cluster at 17.5–19.0%. Where one of these is drawn on the bar it is drawn as a quoted mark and badged as one.

FILED lines are read off the filing linked beside them. DERIVED lines are arithmetic on those figures, using them as printed so the columns add up. ASSUMED lines would be stated assumptions, and none is used. THIRD PARTY and AUTHOR figures are drawn only as quoted marks on the bar. A marginal return below a hurdle is a fact about capital allocation with a one-year shelf life. Figures as filed to 9 September 2026.

Sources

Paper trail

Figures as filed to 9 September 2026.

  1. 01CME Group & Silicon Data · Compute futures, 5 Oct launch
  2. 02CNBC · Computing power becomes a tradable asset class
  3. 03NVIDIA · $500B+ infrastructure financing platform
  4. 04CoreWeave · Form 8-K
  5. 05NVIDIA · up to $105B behind OpenAI's Ohio lease
  6. 06Anthropic · $30B Azure commitment, $15B from Microsoft and NVIDIA
  7. 07OpenAI · Microsoft partnership update
  8. 08Meta · CoreWeave commitment
  9. 09Meta · Nebius capacity agreement
  10. 10Microsoft · Form 10-K, FY2026
  11. 11Cisco Systems · Form 10-K, FY2000
  12. 12Cisco Systems · Form 10-K, FY2001
  13. 13McDonald's · Form 10-K, FY2025
  14. 14Damodaran, NYU Stern · Cost of capital by industry sector
  15. 15BigBankTheory · How To Predict The AI Bubble Before Wall Street