Circular financing in AI refers to a 2024–2026 pattern in which AI infrastructure spending and investment flow in closed loops among a small number of firms, such that the same dollars are counted as revenue, investment, or capital expenditure depending on a firm's position in the loop. Observers including Senator Elizabeth Warren and several financial outlets have argued that the pattern amplifies apparent market size while concentrating risk across interlinked firms.
The core loops
Nvidia and OpenAI
On September 22, 2025, OpenAI and Nvidia announced a 10 GW partnership under which Nvidia committed up to $100B in investment in OpenAI. Under the announced structure, Nvidia's investment funds OpenAI's purchase of Nvidia GPUs at scale, so that revenue flows from Nvidia to OpenAI and back to Nvidia. On September 23, 2025, The Information reported on the financing mechanism under the headline "In OpenAI Megadeal, Nvidia Discusses a New Business Model: Chip Leasing." On January 30, 2026, the WSJ and Reuters reported that Nvidia's $100B stake had stalled; Jensen Huang publicly denied being unhappy with the arrangement on January 31, 2026.
Microsoft and OpenAI
Microsoft's stake comprises more than $13B in investment plus IP rights, against which OpenAI committed $250B back to Microsoft Azure. On November 12, 2025, The Information published "Here's How Much OpenAI Spends On Inference and Its Revenue Share With Microsoft." On October 29, 2025, The Register reported that Microsoft earnings suggested more than $11.5B in quarterly OpenAI losses flowing through Microsoft's books.
OpenAI, Oracle, and CoreWeave
OpenAI committed $300B to Oracle Cloud, with Oracle taking on debt to build the capacity, and $11.9B to CoreWeave, which likewise took on debt to build capacity for OpenAI. In a January 28, 2026 letter, Senator Elizabeth Warren wrote that OpenAI had "leverage[d] other people's balance sheets," with more than $100B borrowed by partners to build for OpenAI while keeping OpenAI's own debt load low (Sen. Warren Letter to OpenAI (2026-01-28)).
Amazon, Anthropic, and OpenAI
Amazon committed up to more than $4B to Anthropic, with more planned as of July 2025. On October 31, 2025, Bloomberg reported that Alphabet and Amazon stakes in Anthropic boosted those firms' profit by billions through mark-to-market gains. On January 29, 2026, Amazon was reported to be in talks for a $50B OpenAI investment, which would make Amazon simultaneously the largest external investor in both Anthropic and OpenAI.
Supplier-issued warrants tied to purchase commitments
Several 2026 supply agreements ran equity in the opposite direction to the loops above: the supplier granted the customer rights to its own shares, vesting as the customer paid or committed further spending. Akamai's Form 8-K of September 24, 2026 discloses that, in consideration of Anthropic's entry into Project Plan 3 on September 18, 2026, Akamai issued Anthropic a warrant for up to 387,051 shares of Series B non-voting convertible preferred stock (7,741,020 common shares as converted) at $2,226.60 per warrant share; 40% vests on Anthropic's first payment under Project Plan 3 and three 20% tranches on each additional $3.0 billion of contract value Anthropic commits, alongside an approximately $11.6 billion commitment (Akamai Technologies Form 8-K: Anthropic Project Plans and Warrant Agreement (September 2026)). Qualcomm disclosed on September 8, 2026 warrants for Amazon to acquire 25 million Qualcomm shares at $161.26 each, vesting with commercial arrangements and Amazon's purchase of up to $60 billion of Qualcomm server chips and other technology (Source: cnbc.com). Marvell issued Google a warrant on August 18, 2026 for 58.97 million shares at $206.58, most of it vesting in tranches of one per $500 million of custom-products revenue from Google (Source: qz.com). Data-center developer SB Energy issued OpenAI warrants the Wall Street Journal estimated at $5.5 billion to secure it as a tenant (Source: wsj.com), and OpenAI exercised its vested Cerebras warrants in July 2026 for 10,033,508 Class N shares at $0.00001 each (Source: implicator.ai). None of these filings or reports describes the arrangements as circular financing; their common feature is that the customer's spending and its equity position in the supplier are contractually linked. See Amazon, Google DeepMind, SB Energy, Cerebras Systems.
Correlated exposure in infrastructure finance
Stijn Van Nieuwerburgh's Brookings Papers on Economic Activity paper (Fall 2026) extends the circularity argument from revenue counting to credit risk. It argues that chip designers, cloud providers, model developers, data-center operators and infrastructure investors depend on one another through long-term contracts, strategic investments and financing arrangements. A shock to one segment, such as weaker demand from model developers or stress at a major tenant, would therefore reach cloud revenues, lease payments, asset values and creditor recoveries, which makes exposures "more correlated than they may appear when each transaction is viewed in isolation." His example is the $500 billion credit facility set up in August 2026 by Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to finance NVIDIA chips. He writes that NVIDIA "will provide a 25% residual value guarantee, exposing it to as much as $125 billion of backstops," and that Google and Broadcom entered a similar arrangement for TPU chips. The paper also notes that frontier AI firms such as OpenAI and Anthropic lack comparable standalone credit profiles and obtain compute through hyperscaler contracts, "effectively relying on the hyperscalers' balance sheets and creditworthiness" (Financing the AI Buildout (Van Nieuwerburgh, BPEA Fall 2026)). Contemporary reporting described the NVIDIA arrangements as memorandums of understanding with an option, not an obligation, for Nvidia to backstop up to 25% of a project's financing; see Nvidia & TSMC — AI Compute Infrastructure.
Inflated market signals
A single dollar flowing through Microsoft to OpenAI to Nvidia can be counted simultaneously as Microsoft's AI revenue (Azure consumption), OpenAI's investment intake, and Nvidia's product revenue, tripling apparent AI-market size. Warren's January 28, 2026 letter framed the arrangement as "systemic risk" (Sen. Warren Letter to OpenAI (2026-01-28)).
Concentrated risk
The interlinked structure means that the failure of any one node — OpenAI slowing growth, Microsoft reconsidering its commitment, Nvidia's own customers slowing, or Oracle debt becoming unserviceable — transmits a shock to all connected nodes.
The debt-funding leg of the loop drew attention in 2026. On April 24, 2026, the WSJ reported that JPMorgan and other banks had struggled to syndicate billions of dollars in loans tied to Oracle data-center leases in Texas and Wisconsin, described as a signal that the debt-funding leg of the loop was hitting market constraints (Source: wsj.com). Two days earlier, on April 22, 2026, The Information reported that OpenAI and Oracle had formed DeployCo, a $1.5B joint venture for AI data-center deployment that formalized the prior Oracle-OpenAI compute relationship into a co-owned vehicle (Source: theinformation.com).
Coverage and analysis
Financial outlets covered the pattern through late 2025 and into 2026. On October 22, 2025, the WSJ ran "Is the Flurry of Circular AI Deals a Win-Win — or Sign of a Bubble?" On November 10, 2025, the NYT published "Why Debt Funding Is Ratcheting Up the Risks of the A.I. Boom." On November 18, 2025, TheStreet ran "Nvidia, Microsoft deal takes 'circular' financing to entirely new level."
In July 2026 Nvidia formalized a revenue-share backstop program: it agreed to rent back neocloud customers' unused GPUs at a fixed rate — using its balance sheet to help customers finance purchases of its own chips — in exchange for a share of those customers' cloud revenue, with Firmus and Sharon AI the first adopters after 2025 backstop deals with CoreWeave ($6.3B) and Lambda ($1.5B) (Sources: theinformation.com; datacenterdynamics.com).
On May 9, 2026, CNBC reported that Nvidia had committed more than $40B to AI-infrastructure equity in 2026, including $30B to OpenAI, $3.2B to Corning, and $2.1B to IREN, drawing analyst critique over the circular vendor-financing pattern. The 2026 equity-bet total recast the prior $100B OpenAI commitment as one component of a broader Nvidia-as-AI-investor posture (Source: cnbc.com).
The pattern was also reported outside the United States. On April 22, 2026, Bloomberg reported that Tencent and Alibaba together committed more than $20B to DeepSeek-centric infrastructure builds, a Chinese parallel to the US circular pattern (Source: bloomberg.com).
Matt Stoller argued on August 2, 2026 that the financial reporting of the largest AI spenders cannot be checked from public filings, pointing to cross-subsidization at Google, Amazon, Microsoft and Nvidia and to the use of shell companies and off-balance-sheet instruments. He proposed repealing parts of the JOBS Act of 2012 to restore the earlier SEC registration thresholds of 500 shareholders and $10 million in assets, stricter SEC enforcement of disclosure on material lines of business, revenues and risks, and tighter Public Company Accounting Oversight Board inspection of the hyperscalers' auditors, framing the approach as what New Deal regulators did with 1920s financiers (Source: thebignewsletter.com). The argument is a disclosure-regime critique rather than a measurement of the loops described above, and is offered as an attributed position. See AI Bubble Debate.
A public-market valuation reference point for non-Nvidia compute emerged in May 2026. On May 11, 2026, Cerebras Systems upsized its IPO to 30M shares at $150–$160, targeting up to a $4.8B raise at a $34.4B valuation, with trading expected May 14. The offering represented a partial public-market exit for a non-Nvidia compute provider and a non-Nvidia frontier-compute IPO valuation reference point (Source: bloomberg.com).
Relationships
- supports: AI Bubble Debate.
- related: Financing the AI Buildout (Van Nieuwerburgh, BPEA Fall 2026) — BPEA paper on correlated exposure across the AI value chain; Stijn Van Nieuwerburgh.
- depends-on: OpenAI, Nvidia & TSMC — AI Compute Infrastructure, Microsoft, Amazon, Anthropic, CoreWeave.
- related: Akamai Technologies Form 8-K: Anthropic Project Plans and Warrant Agreement (September 2026), Akamai Technologies — supplier-issued warrant vesting with Anthropic's purchase commitments.
- related: Sen. Warren Letter to OpenAI (2026-01-28), AI Is Really Weird, Bain & Company — 6th Annual Global Technology Report (2025), (Source: Raw Sources/SemiAnalysis - Stargate Data Center Layer Cake.md).