Commentary: Who’s paying whom? The circular money machine behind the AI boom

The AI boom may be driven more by financing arrangements than genuine end-user demand, according to academics. Companies like Microsoft, Amazon, Google, and Nvidia all play multiple roles in the AI market - as suppliers, investors and customers. A central bank analysis revealed that 55.2% of investments in AI firms came from other AI companies.

The market's opacity and circular funding arrangements have raised concerns about the sustainability of the boom. Nvidia, the leading chipmaker, is among those financing AI firms, including OpenAI, Anthropic, and CoreWeave. In some cases, Nvidia's investments are guaranteed up to $105 billion.

These circular financing deals help spur the rapid expansion of AI infrastructure, but they also concentrate risk. If one firm encounters trouble, it can quickly spread to others due to their interconnected financing structures. The Reserve Bank of Australia warned that this opaque financing could lead to a bubble bursting, potentially causing losses for investors and super funds.

The AI boom's impact on the broader market is significant. Nearly all the gains in the US stock market have been driven by AI companies, with chipmakers contributing around 70% of the total gains in 2026. If investors doubt the revenue-generating capacity of AI firms, Nvidia could suffer from lower sales and financing exposure. This could have a ripple effect on the entire market, affecting Australians who hold AI stocks through their superannuation funds.