What Is "Circular Financing" in AI — and Why Does It Matter?

The AI boom has given rise to a financing model where the same giants invest in each other, buy each other's services, and supply each other's infrastructure. Critics call it circular financing, and it sits at the heart of today's AI ecosystem.

How Does the Circular Model Work?

The mechanics are straightforward: Company A pays Company B for a product or service — or invests in it directly. Company B then turns around and buys products or services from Company A. Money flows in a loop rather than in a straight line.

The pattern became a template after Microsoft invested $10 billion in OpenAI following the ChatGPT launch in November 2022. OpenAI in turn became a key client of Microsoft's cloud services. Amazon and Alphabet replicated the playbook by pouring billions into Anthropic, whose Claude chatbot competes with ChatGPT — and Anthropic uses Amazon and Google cloud services and buys their chips in return.

Where Does Nvidia Fit In?

Nvidia sits at the very center of this web. Reports suggest the chipmaker is negotiating a financial support package of nearly $250 billion for an OpenAI data-center project — a figure that underlines both the scale of AI ambitions and the depth of interdependence between players.

Is There a Real Bubble Risk?

Analysts are divided. Gary Tan, portfolio manager at Allspring Global Investments, acknowledges that the interconnected nature of the AI ecosystem is real, but argues that short-term risks are mitigated by strong balance sheets, cash flows, and credit quality of the main actors. Jan Frederik Slijkerman, technology strategist at ING, finds the degree of collaboration "fascinating" but does not see systemic risk from this kind of interdependence, pointing to the financial robustness of Nvidia, Microsoft, Amazon, and Alphabet.

The key question remains: if one domino falls, do the others follow?

Key Facts:
  • Nvidia is reportedly negotiating a ~$250 billion financial support package for OpenAI's data-center project.
  • Microsoft invested $10 billion in OpenAI after the ChatGPT launch in November 2022.
  • Amazon and Alphabet have invested billions in Anthropic, which uses their cloud and chip services.
  • Analysts at Allspring and ING see no immediate systemic risk, citing strong corporate fundamentals.
  • The circular financing model was largely shaped by the Microsoft–OpenAI deal.