Interlinked AI financing fuels Silicon Valley bubble jitters

Silicon Valley’s AI boom is increasingly defined by complex financing webs that are stoking fears of a bubble, even as revenue at top players surges. At OpenAI’s DevDay, CEO Sam Altman acknowledged “bubbly” pockets in the market but defended his company’s momentum amid a sprawl of tie-ups: a reported $100 billion arrangement with Nvidia, a multibillion-dollar equipment plan with AMD, deep ties to Microsoft, and a separate mega-deal with Oracle. Nvidia, meanwhile, has invested in CoreWeave, a key OpenAI infrastructure provider—relationships critics say risk “circular” or “vendor” financing that may overstate true demand.
Warnings are piling up from the Bank of England, the IMF and JPMorgan’s Jamie Dimon, as AI-related names account for the bulk of this year’s U.S. stock gains and Gartner projects global AI spending could reach $1.5 trillion by end-2025. Veterans of past booms see red flags, from retail chasers bidding up chip stocks to ambitious buildouts of power-hungry data centers. Some draw parallels to Nortel-era practices that juiced sales through customer financing.
Defenders argue even overinvestment could leave behind valuable infrastructure, just as the dot-com bust paved the way for the modern internet. But questions loom over who can continue bankrolling the sector’s capital needs. “Nvidia looks like the last lender,” one investor said, as concerns grow that the financing treadmill—and the market’s lofty expectations—may be outpacing sustainable economics.

Read more