Three years ago, generative AI was overlooked; now, it dominates Wall Street discussions. The rise of “circular deals,” where AI firms invest in suppliers like Microsoft and Nvidia, has created a self-sustaining financial ecosystem. For instance, Anthropic received $15 billion but committed to $30 billion in infrastructure spending, underscoring a tight investment loop.
This phenomenon raises questions about sustainability amidst skyrocketing capital needs—estimated at $7 trillion for AI by 2030. As competition intensifies among OpenAI, Anthropic, and others, cost pressures mount. OpenAI’s reliance on cloud infrastructure from Oracle highlights the risks and rewards of circular financing.
While the AI boom shows promise, concerns loom over whether we are in a bubble. Analysts warn that an external shock could disrupt this tightly knit financial landscape. Ultimately, understanding the balance between growth and risk will be crucial as the AI landscape evolves.
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