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The Optimist View: "Building the Invisible Railroad"
Defenders of Big Tech argue this is completely different from past economic bubbles. First, today’s hyperscalers (like Microsoft and Google) have massive, highly profitable core businesses (like search, enterprise software, and retail) to fund these bets — they aren't relying on shaky junk bonds.
Second, the money is being anchored into tangible, physical assets. Even if an individual AI company fails, the hyper-advanced data centers, the gigawatts of power grid connections, and the millions of silicon microchips will still exist. When the dot-com bubble burst, the massive oversupply of "dark fiber" cables left in the ground is what actually made the high-speed broadband internet of the 2000s economically viable.

The Takeaway
Tech companies are using circular financing because building AI data centers requires a level of capital that traditional bank loans simply cannot provide. By funding each other, the tech ecosystem ensures that the physical backbone of the next technological era gets built at breakneck speed—they are just praying that real, organic consumer demand catches up before the music stops.

Gemini AI

https://builtin.com/articles/ai-circular-financing#:~:text=Physical%20Infrastructure%20Growth%3A%20The%20billions,AI%20keeps%20pace%20with%20development.
https://youtube.com/watch?v=jEjB41hDAyg
https://medium.com/@_rajaraman/big-techs-ai-accounting-loop-when-investment-looks-like-revenue-43a33aa57b2a
https://builtin.com/articles/ai-circular-financing#:~:text=OpenAI%20then%20spends%20most%20of,for%20over%20long%2Dterm%20contracts.
https://builtin.com/articles/ai-circular financing#:~:text=Physical%20Infrastructure%20Growth%3A%20The%20billions,AI%20keeps%20pace%20with%20development.
https://www.noahpinion.blog/p/should-we-worry-about-ais-circular
https://www.pon.harvard.edu/daily/dealmaking-daily/what-are-circular-deals/#:~:text=In%20September%2C%20OpenAI%2C%20the%20maker,Nvidia%20to%20build%20data%20centers.&text=Then%2C%20in%20early%20October%2C%20OpenAI,Rob%20Wile%20for%20NBC%20News.
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/does-circularity-in-ai-deals-warn-of-a-bubble/#:~:text=Considering%20that%20many%20past%20bubbles,other%20to%20inflate%20growth1.

medium.com
Big Tech's AI Accounting Loop: When Investment Looks Like Revenue | by Raja Raman
When OpenAI “invests” in AMD stock and “pre-buys” Nvidia chips, those deals get framed as progress. Revenue spikes on paper, even if no real profit exists. ...
https://medium.com/@_rajaraman/big-techs-ai-accounting-loop-when-investment-looks-like-revenue-43a33aa57b2a#:~:text=When%20OpenAI%20%E2%80%9Cinvests%E2%80%9D%20in%20AMD,without%20the%20substance%20beneath%20it.