Circular financing

Everyone in AI is financing everyone else. Nvidia backs OpenAI. OpenAI commits to buy Nvidia chips. Nvidia backs CoreWeave. CoreWeave buys Nvidia chips and rents them back to… OpenAI. Microsoft and Nvidia back Anthropic. Anthropic pledges billions in Azure spend. AMD puts money into Anthropic in exchange for a multi-gigawatt chip order.

Round and round it goes. This is “circular financing,” and this year it stopped being a footnote in the financial statements and became the main story. Nvidia alone has signed or opened talks on more than $750B in deals in a single week, including a proposal to guarantee up to $250B of OpenAI’s data center leases and finance another $350B of its chip purchases. The logic: OpenAI doesn’t have investment-grade credit, so a guarantee from a company with a 75%+ margin lets it borrow cheaply. In exchange, that debt gets spent on Nvidia silicon. Nvidia’s Jensen Huang argues these stakes are a small fraction of what these companies ultimately raise elsewhere, and that the compute shortage is real, locking in supply chains this way is just how capital-intensive industries behave under scarcity.

But the risk is real too. A handful of companies are now investors, suppliers, and customers of each other simultaneously. That makes reported “demand” harder to distinguish from vendor financing dressed up as revenue, and it means a stumble anywhere in the loop, a valuation miss, a credit downgrade, a demand slowdown, doesn’t stay contained. It moves through the whole structure. We got a preview of that in late July: over $1T in market value came off AI hardware stocks in five days, and CoreWeave’s credit-default swaps briefly implied a coin-flip odds of default. The AI buildout is genuinely capital-intensive, and vendor financing isn’t new. What’s new is the scale and the density of the web, and how much of the industry’s growth narrative now depends on capital flowing in a circle rather than in from outside it.

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