The Great AI Gamble: Inside the Circular Deals Powering the Boom

Is the AI revolution a transformative leap forward—or a multi-billion-dollar house of cards?

A High-Stakes Game of Infinite Loops

Imagine this: a tech giant invests billions into an AI startup, which then uses that money to purchase hardware or services from the very same company that funded it. This “merry-go-round of money” is not a hypothetical scenario—it’s the backbone of the current artificial intelligence boom.

Key Takeaways:

Circular deals are driving the AI boom, with companies investing in their own customers to create closed financial loops.
Tech giants like Nvidia, OpenAI, Microsoft, and Oracle are interdependent, creating a fragile ecosystem of mutual reliance.
Investments are funding physical infrastructure like data centers, chips, and cloud platforms, but risks of over-concentration loom.
Critics compare the current AI frenzy to the dot-com bubble, warning about potential collapse if one link falters.
Advocates argue this time is different due to tangible assets and profitability of major players fueling sustainable growth.

As of early 2026, the global economy is priced for an AI revolution that seems destined to succeed. Trillions of dollars in market value hinge on the assumption that AI will unlock unprecedented productivity gains, transform industries, and drive profits for decades to come. But beneath the surface of record-breaking valuations and headline-grabbing breakthroughs lies a precarious financial structure: circular deals.

This high-stakes system—where tech giants like Nvidia, OpenAI, Microsoft, and Oracle are not just partners but also each other’s customers and financiers—has created a web of dependencies. Every dollar spent in this ecosystem often finds its way back as revenue for another partner. On paper, it looks like a virtuous cycle. In reality, it could be a financial ouroboros: a self-consuming snake that risks collapsing under its own weight.

Are these circular deals the strategic scaffolding of a new technological era—or the foundation of a trillion-dollar bubble waiting to burst?

Contextual Significance: Why This Matters Now

The AI boom is not just another tech trend; it’s the defining economic narrative of this decade. From generative AI tools like ChatGPT to autonomous systems and personalized medicine, artificial intelligence promises to reshape the way we live and work. Governments are pouring billions into AI research, businesses are racing to integrate machine learning into their workflows, and investors are betting big on the companies leading the charge.

Yet, as history has shown—from the dot-com bubble of the late 1990s to the subprime mortgage crisis of 2008—financial euphoria often obscures underlying risks. Today’s AI economy is built on an intricate web of circular deals that, while fueling rapid growth, also concentrate risk in troubling ways. If one link in this chain falters, the entire ecosystem could unravel.

The Financial Ouroboros: How Money Loops in AI

At the heart of the AI boom lies a peculiar financial phenomenon: circular deals. These arrangements occur when companies invest in their own customers, creating a closed loop where capital flows in circles rather than spreading organically across the economy. Here’s how it works in practice:

The Nvidia-OpenAI Connection: In late 2025, Nvidia announced a groundbreaking $100 billion investment in OpenAI. The catch? OpenAI committed to using this capital to build 10 gigawatts (GW) of data center capacity—almost exclusively powered by Nvidia’s cutting-edge GB200 chips. In essence, Nvidia is funding its own demand.
The Stargate Triangle: OpenAI also inked a $300 billion cloud services deal with Oracle under “Project Stargate.” To meet this demand, Oracle is spending an estimated $40 billion on Nvidia chips to expand its infrastructure. This creates yet another loop: Oracle depends on Nvidia for hardware, while Nvidia depends on OpenAI’s success to justify its investment.
The Microsoft Feedback Loop: Microsoft has poured billions into OpenAI since 2019 and remains its primary backer. In return, OpenAI has committed to spending up to $250 billion on Microsoft’s Azure cloud platform through 2032. Microsoft profits from OpenAI’s success—success that Microsoft has heavily funded.

These loops are not inherently nefarious; they represent strategic partnerships aimed at scaling AI technologies quickly. But they also create a fragile system where failure in one part of the chain could ripple across the entire ecosystem.

History Repeating? The Dot-Com Echo

Critics of the current AI investment frenzy draw parallels to the dot-com bubble of the late 1990s, when companies engaged in “round-tripping” schemes to inflate revenues artificially. Back then, telecom firms like Global Crossing and equipment providers like Lucent Technologies lent money to their customers so they could buy more products—giving the illusion of robust demand where none existed.

When reality caught up with these companies, the fallout was catastrophic. Billions in market value evaporated overnight, and countless investors were left holding worthless stock.

Advocates of today’s AI boom argue that this time is different:

Tangible Assets: Unlike the dot-com era, where investments often went toward speculative ventures or advertising, today’s capital is building physical infrastructure—data centers, advanced chips, and software platforms with clear utility.
Profitability of Giants: The tech behemoths driving this boom—Microsoft, Amazon, Alphabet, and Meta—are not cash-strapped startups reliant on venture capital; they are some of the most profitable companies in history.
Real Usage: Generative AI tools like ChatGPT and DALL·E already boast hundreds of millions of active users, demonstrating real-world demand that far exceeds anything seen during the dot-com era.

Still, skeptics caution that even tangible assets and real usage do not guarantee sustainable profitability—especially when so much of today’s activity is fueled by circular financing rather than organic growth.

The Risks: Systemic Fragility and Overstated Demand

While circular deals have undeniably accelerated the development of AI technologies, they come with significant risks that could destabilize the industry if left unchecked:

Overbuilt Capacity
Companies are building massive data centers and acquiring advanced chips based on optimistic forecasts rather than confirmed demand. If enterprise adoption of AI slows—or if consumer enthusiasm wanes—these assets could become “ghost infrastructure,” sitting idle while generating no return on investment.
Hidden Exposure
The interconnected nature of these circular deals means that failure in one part of the system could ripple across the entire ecosystem. For example, if OpenAI struggles to monetize its products at scale, it could jeopardize Nvidia’s chip sales, Oracle’s cloud infrastructure investments, and Microsoft’s Azure revenue projections—all at once.
Market Concentration
The current model gives outsized control over the future of AI to a handful of tech giants: Nvidia, Microsoft, Amazon, and Google. This concentration stifles competition from smaller players and increases systemic risk by putting all bets on a few dominant firms.

Actionable Insights for Navigating the Hype

For business leaders, investors, and policymakers navigating this high-stakes landscape, caution is key. Here are three actionable strategies to consider:

Look Beyond Top-Line Revenue
Scrutinize revenue sources to distinguish organic growth from vendor-financed deals. High revenue numbers may mask underlying vulnerabilities if they’re primarily driven by circular funding arrangements rather than genuine market demand.
Monitor “Monetization Milestones”
The long-term success of AI depends on whether businesses can translate these technologies into profits—not just efficiency gains or cost savings. Look for clear evidence of sustainable monetization before making big bets on AI-driven companies.
Diversify Strategic Partners
Avoid tying your company’s success to a single “loop” within the AI ecosystem. Partnering with multiple providers can mitigate risk and ensure greater resilience in case one part of the chain falters.

Conclusion: The Trillion-Dollar Question

The circular deals fueling today’s AI boom represent one of the most ambitious financial experiments in modern history—a gamble on whether artificial intelligence can deliver transformative economic value before its financial scaffolding collapses under its own weight.

If successful, these investments will be remembered as a masterstroke in strategic scaling that ushered in a new era of productivity and innovation. But if they fail—if demand falls short or monetization proves elusive—the unraveling of these interconnected dependencies could trigger a tech-specific recession unlike anything we’ve seen since the dot-com crash.

So here we stand at a crossroads: Is this “virtuous cycle” of investment sustainable? Or is it merely buying time for an industry that hasn’t yet proven its profitability? For businesses and investors alike, answering this question isn’t just an intellectual exercise—it’s a matter of survival in what may be remembered as The Great AI Gamble.

What do you think? Is this circular economy a bold strategy or a dangerous game? Let us know your thoughts—and your bets.

How Circular Deals Are Driving the AI Boom