"Well, that actually is a better segue to this next chart I was going to show you than I thought it would be, which is there's some suspicions going around that this whole thing has become a kind of circular money machine, that the hunt for growth, the hunt for justifying share prices and investment and valuations is leading to just money constantly passing hands to create the almost appearance of activity."
"-And, again -Bidirectionally, yes -And bidirectionally, it's not like you pay someone and they pay someone else. It's like you pay them. And they pay you. Yes, you invest in them and they invest in you. So I'm going to invest in you. And then not only are you going to buy chips from me, you're going to make an equity investment."
Major AI companies have reciprocal equity investments and commercial relationships, forming dense interlinkages centered around firms like Nvidia. Companies such as Nvidia, OpenAI and CoreWeave both invest in one another and transact commercially, for example when CoreWeave buys Nvidia chips, recycling revenue back to investors. These bidirectional investments and purchases can create circular money flows that amplify perceived activity and support valuations. The drive for rapid growth and high valuations incentivizes transactions that may primarily circulate capital among related parties. Such circular financial arrangements carry risks by potentially inflating apparent demand and obscuring the true economic fundamentals of businesses.
Read at www.nytimes.com
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