AI’s circular financing red flag

Major AI and chip firms are simultaneously investing in one another and booking sales to those same partners, creating a closed loop where capital becomes counterparties’ revenue. If real end‑user demand lags these commitments, the feedback loop can inflate results and magnify a bust. — It reframes the AI boom as a potential balance‑sheet and governance risk, urging regulators and investors to distinguish circular partner revenue from sustainable market demand.

Sources

OpenAI Partners Amass $100 Billion Debt Pile To Fund Its Ambitions

msmash 2025.11.29 78% relevant

The piece shows how OpenAI is 'leveraging other people's balance sheets'—partners borrow to build capacity and lenders underwrite those loans—creating tightly coupled financial exposure across vendors, investors, and banks, matching the circular/counterparty financing risk the existing idea warns about.

'Circular' AI Mega-Deals by AI and Hardware Giants are Raising Eyebrows

EditorDavid 2025.10.11 100% relevant

SFGate notes Nvidia funding OpenAI while selling it chips, OpenAI earning AMD equity while buying its processors, and CoreWeave (part‑owned by Nvidia) building OpenAI data centers.