{
  "id": 15524718,
  "title": "Who's paying whom? The circular money machine behind the AI boom (or bubble)",
  "url": "https://urgent.news/2026/10/19/whos-paying-whom-the-circular-money-machine-behind-the-ai-boom-or",
  "topic": "ai",
  "section": "AI",
  "published": "2026-10-19T00:30:01.000Z",
  "source": {
    "name": "Phys.org",
    "slug": "phys-org",
    "url": "https://phys.org/news/2026-10-paying-circular-money-machine-ai.html"
  },
  "original_language": "en",
  "account": "The AI boom is fueled by a complex network of financing arrangements where chip suppliers, investors, and customers all play multiple roles, often creating a circular flow of money. This opaque method of financing involves a chip supplier investing in a customer like a data center builder, who then uses the funds to purchase the supplier's chips. These companies report growth, making it difficult for investors to discern how much of the AI boom is driven by genuine demand and how much is a potential bubble. Nvidia, the world's leading chipmaker, has invested billions in AI firms like OpenAI and Anthropic, providing guarantees for data center projects. These circular investments accelerate the expansion of AI infrastructure but obscure the demand from end-users and concentrate financial risk. If investor sentiment shifts unfavorably towards AI companies, the entire market could suffer, particularly since nearly all stock market gains in recent years have been driven by AI companies. The situation is reminiscent of the 1990s telecom boom, where equipment makers financed customers to buy their equipment, leading to a subsequent stock market crash.",
  "summary": "Imagine a company that sells you equipment, invests money in your business and then rents back what you build with it. It's your supplier, your investor and your customer all at once.",
  "key_points": [
    "Chip suppliers invest in customers like data center builders",
    "Customers use funds to purchase suppliers' chips, creating circular flow",
    "Nvidia invested billions in AI firms, guaranteeing data center projects"
  ],
  "editors_take": "These circular financing arrangements mask true end-user demand and concentrate systemic risk by creating a self-sustaining loop of investment and purchasing that mirrors the unsustainable patterns of previous market bubbles.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}