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Opinion
AI titans’ ‘circular deals’ are starting to look like ‘daisy chains’
It’s time to ask how much of the industry’s extraordinary growth is being financed by the same companies benefiting from it
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James David Spellman, a graduate of Oxford University, is principal of Strategic Communications LLC, a consulting firm based in Washington, DC.
The “circular deals” among AI titans increasingly resemble the “daisy chains” of the 1980s savings-and-loan crisis.
Forty years ago, interconnected transactions obscured the dangers, multiplied systemic risks and helped inflate asset values before roughly a third of US thrift banks failed. Today’s financial engineering – an incestuous ecosystem of interlocking multi-year commitments to provide financing, buy semiconductors, secure gigawatts of power and lease data centres – could meet a similar fate, especially if revenue fails to outpace costs or a black swan event eviscerates artificial intelligence (AI) trajectories.
OpenAI has struck deals with Nvidia, CoreWeave and others ahead of an initial public offering planned for next year while competitors Anthropic and xAI have pursued similar agreements. Anthropic’s US$35 billion cloud-computing deal with provider Lambda is the latest example. Last month, the AI developer signed a US$45 billion arrangement with another Nvidia-backed neocloud, Nscale, to rent data-centre capacity.
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