Chinese AI, what makes it so great? Experts explain in detail its performance, differences with the US, and more

While the global investment in AI infrastructure is projected to reach $7 trillion this year and potentially $1 trillion next year, a complex financial structure known as "circulare finance" is emerging among major AI companies, chip manufacturers, hyperscalers, and cloud providers. This intricate funding arrangement involves companies like NVIDIA, OpenAI, Google, Amazon, Meta, Oracle, Microsoft, CoreWeave, and Nevius.

They often invest shares, provide financing, or offer guarantees to facilitate external funding, leading to the purchase of chips. These transactions frequently include long-term payment obligations, making it difficult to understand their interconnectedness. There are roughly four main types of circulare finance: NVIDIA's partnership with OpenAI, where NVIDIA commits to providing billions of dollars in shares or loans to OpenAI for GPU purchases each year; hyperscalers like CoreWeave taking out loans secured by NVIDIA chips, using the cash flow from the leased cloud computing as collateral; NVIDIA's $50 billion AI infrastructure platform with banks like BlackRock, Goldman Sachs, and KKR, where NVIDIA assumes some credit risk by guaranteeing 25% of the remaining value of the chips; and NVIDIA providing financial guarantees worth up to $105 billion to help OpenAI build its largest data centers.

The Economist suggests this new credit market is opening, with NVIDIA acting as a financial intermediary connecting investors to its customers - data center operators. However, critics warn that such a concentration of risk could cause a domino effect if a few giant companies fail.