AI Data Center Craze Demands Lease Accounting Judgment Calls

Big Tech is clamoring for space in data centers to meet artificial intelligence’s growing energy demands, leading to new financial commitments that can be tricky to capture on corporate balance sheets.

Both PayPal Holdings Inc. and its competitor Block Inc. rely on data centers to power their financial technology offerings. Though PayPal included data centers in its leases portfolio in recent annual and quarterly reports, Block—the company behind Square and Cash App—classified costs related to these kinds of third-party facilities as product development expenses in its latest annual report.

Such differences highlight the judgment calls businesses make in ...