The AI boom's reliance on circular deals is raising fears of a bubble (www.nbcnews.com)

A tightening web of interlocking investments and supply deals is increasingly underpinning the AI boom: Nvidia pledged up to $100 billion to OpenAI; OpenAI struck a deal to buy chips from AMD in exchange for up to a 10% stake; Oracle is committing roughly $40 billion to buy Nvidia chips for OpenAI-powered data centers; Nvidia holds a stake in CoreWeave, a cloud provider that sells Nvidia systems to OpenAI; and Oracle, OpenAI and SoftBank are planning a massive $500 billion data‑center project called Stargate with Nvidia as a core technology partner. These circular relationships span chip makers, cloud providers and AI developers and have helped drive valuations—and stock indices—soaring as investors bet on gigantic future returns from GPUs, accelerators and hyperscale AI infrastructure. The concentration of capital and compute across a few tightly connected firms raises systemic risks for the AI/ML community and broader markets. Analysts warn related‑party transactions and reciprocal investments can create a mirage of growth: if AI productivity gains or monetization lag, the large, interdependent obligations (data‑center capacity, chip purchases, equity stakes) could trigger a sharp correction reminiscent of the dot‑com crash. Technically, the deals bet heavily on continued demand for high‑end GPUs and specialized accelerators and on rapid scaling of cloud inference/training capacity; if revenue realization fails to match that capacity growth, returns won’t cover the massive upfront spend, amplifying downside for the whole ecosystem.