The Circular Economy

The Core Mechanism

In late 2025, a series of multi-billion-dollar deals in the AI sector created what Bloomberg called a "web of circular deals" worth over $1 trillion. Money, computer chips, and cloud credits rotate in a closed loop among a handful of companies: NVIDIA, OpenAI, Microsoft, Oracle, AMD, CoreWeave, xAI, and others.

The arrangement is so circular that dollars spent by one player often return as revenue for another. This gives the impression of breakneck growth. Critics compare it to the late-1990s dot-com bubble, where companies bought each other's ads with no real product.

The Deal Register

Every major circular transaction we have documented, with sources. Amounts in USD billions.

The Scale of Circularity

Across Microsoft, Oracle, Google, and Amazon, OpenAI and Anthropic together account for roughly half of more than $2 trillion in cloud backlog. The four hyperscalers plan to spend around $725 billion on AI infrastructure in 2026 alone—nearly twice as much as in 2025.

Oracle's cloud revenue backlog surged 438% year-over-year to $523 billion, largely driven by its relationship with OpenAI. When news of the OpenAI-Oracle deal broke, Oracle stock spiked 36% in a day. Larry Ellison's net worth swelled by $88 billion virtually overnight.

The Bull Case

At a December 2025 summit, Anthropic CEO Dario Amodei offered a defence from inside the loop:

"One player has capital and has an interest, because they're selling the chips, and the other player is pretty confident they'll have the revenue at the right time, but they don't have $50 billion at hand."

NVIDIA CEO Jensen Huang said on the BG2 podcast: "I think that OpenAI is likely going to be the next multi-trillion-dollar hyperscale company. The return on that money is going to be fantastic."

The argument: AI infrastructure is genuinely scarce, demand is real, and circular financing is simply how capital-intensive industries bootstrap when no single entity can fund the buildout alone. Railways, telecoms, and electricity grids all used similar structures.

The Bear Case

Bloomberg's October 2025 assessment: "Never before has so much money been spent so rapidly on a technology that, for all its potential, remains largely unproven as an avenue for profit-making."

Morningstar analyst Brian Colello: "If things go bad, circular relationships might be at play."

The circularity is, in other words, the financing mechanism for a technology too expensive for any single company to build alone and too unreliable to be applied to real-world tasks at the scale its theoretical capabilities suggest.

What Would Break the Loop

• Revenue shortfall: If OpenAI/Anthropic run-rate revenue doesn't convert to sustained enterprise contracts
• Model commoditisation: If open-source models close the capability gap, reducing willingness to pay premium API prices
• Energy constraint: If grid capacity cannot expand fast enough to power committed data centres
• Regulatory intervention: If antitrust authorities scrutinise the investment-for-revenue structure
• Interest rate shock: If the cost of servicing $1.65T in hidden AI debt becomes unsustainable

Confidence Assessment