Analysts Question ’Circular Financing’ as Nvidia Pumps $100 Billion into OpenAI

Nvidia just dropped a nuclear warhead of capital—$100 billion straight into OpenAI's coffers.

The AI Arms Race Gets Real

This isn't just venture funding—it's a strategic maneuver that blurs the lines between supplier and stakeholder. Nvidia, the chipmaker fueling the AI revolution, now holds massive influence over one of its biggest customers.

Wall Street Raises Eyebrows

Financial analysts are calling it 'circular financing'—a clever way to ensure your own products keep flying off the shelves. It's like a car manufacturer investing in a ride-sharing company that exclusively uses their vehicles. The money flows in a perfect, self-reinforcing loop.

Silicon Valley's New Playbook

This deal rewrites the rules of corporate investment. Why wait for organic growth when you can turbocharge your entire ecosystem with a nine-figure check? The move signals that tech giants are playing chess while traditional finance still plays checkers.

One hedge fund manager quipped: 'It's the corporate equivalent of buying your own products to hit sales targets—just with more zeros and better PR.' The $100 billion question remains: is this visionary strategy or the ultimate echo chamber?

OpenAI will be leasing Nvidia processors

Nvidia has stated that OpenAI cannot use the investment money for “direct purchases” of Nvidia goods, according to Rasgon’s research note.

Both companies said Monday they are still working out some parts in the agreement. OpenAI intends to lease Nvidia’s AI processors rather than buy them outright, according to executives working on the deal. They also mentioned that predicting how quickly AI chips lose their value over time remains challenging.

Other major technology companies have made similar moves. Amazon.com Inc. and Microsoft Corp. have both invested in leading AI startups to boost business for their cloud computing services. But Nvidia holds a special position in the AI world by controlling the advanced chip market needed to train the most sophisticated AI systems. This dominance has made the company the biggest winner from the AI excitement so far.

The partnership comes during a time of growing uncertainty in the industry. A large number of people, both inside and outside the tech world, now worry about an AI bubble that could burst like the dot-com crash 25 years ago.

Even OpenAI CEO Sam Altman has suggested that some AI startup valuations might not make financial sense. Still, he maintains his belief in AI’s long-term promise and says the industry needs to spend “trillions” on supporting infrastructure.

A costly shift in the AI industry exposed

For OpenAI, which currently loses money, partnering with the world’s most valuable company could open doors to funding and computing power it cannot secure alone.

“It’s kind of like having your parents co-sign on your first mortgage,” explained Jay Goldberg, Seaport Global analyst who has given Nvidia stock a rare sell rating.

Goldberg also sees signs of circular financing in the deal and believes it shows “bubble-like behavior” in the market.

“When times are good, this is going to make things better. We’re going to grow faster; numbers are going to go up much faster,” he said. “But when the cycle turns, and it will turn, it makes things worse on the downside.”

The deal highlights how the AI industry has reached a more expensive phase of development. Building the data centers and buying the specialized equipment needed for advanced AI systems requires enormous amounts of money that even successful companies like OpenAI struggle to raise independently.

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