Nvidia invests billions in OpenAI, OpenAI uses that money and separate compute contracts to pay Oracle and CoreWeave for cloud infrastructure, and those companies use the revenue to buy Nvidia's chips — a closed loop that has already sent Oracle's stock tumbling on a single rumored delay and CoreWeave's shares crashing more than 50% before a partial rebound, and it's central to why the IMF itself warned in July 2026 that frothy AI valuations could correct sharply. This is a factual look at how these deals are structured and why they worry serious analysts, not a prediction about what happens next.
How the Loop Actually Works
The mechanics are simple enough to describe in one sentence: cash leaves a chipmaker's balance sheet as an "investment," and returns to its income statement as "revenue," after passing through one or two AI labs and cloud providers along the way. In practice, the web is enormous. OpenAI alone has named commitments including $250 billion to Microsoft's Azure, $300 billion to Oracle, $138 billion to Amazon's AWS, $22.4 billion to CoreWeave, up to $100 billion from Nvidia, and $10 billion to Broadcom, plus a separate multi-gigawatt chip deal with AMD — with some vendor tallies putting OpenAI's total committed spending through 2035 past $1.1 trillion. Microsoft owns roughly 27% of OpenAI, has invested about $13 billion (much of it in the form of Azure cloud credits rather than cash), and OpenAI has committed $250 billion of that right back to Azure. Amazon has put more than $83 billion combined into Anthropic and OpenAI, and between the two, they've committed more than $238 billion of compute purchases back to AWS.
When the Loop Wobbled: Oracle's Bad Week
The clearest real-world demonstration of how fragile this structure can look happened when reports of a stalled Nvidia-OpenAI negotiation coincided with Oracle announcing plans to raise $50 billion in 2026 to fund infrastructure construction. Investors connected the dots immediately: Oracle is borrowing heavily to build servers for OpenAI, so if Nvidia's funding to OpenAI wavered, could OpenAI still pay Oracle? Oracle's stock dropped in pre-market trading, and the company issued a defensive statement insisting "the Nvidia-OpenAI deal has zero impact on our financial relationship with OpenAI" and that it remained "highly confident in OpenAI's ability to raise funds and meet its commitments" — a statement that, by explicitly naming the fear investors hadn't fully articulated yet, arguably drew more attention to the underlying risk than it calmed.
CoreWeave's Wild Ride
CoreWeave, the AI cloud infrastructure company at the center of several of these deals, offers the sharpest single example of how sentiment around circular financing can swing. Its stock lost more than half its value, falling from a $187 peak to $89.93, as investors worried about both a broader AI demand slowdown and the circularity of its Nvidia relationship specifically, pushing its market cap under $45 billion. CEO Michael Intrator pushed back directly and publicly, calling circular-financing claims "ridiculous" and pointing out that Nvidia's actual investment — roughly $300 million across two funding rounds for a 7% equity stake — is simply too small to meaningfully prop up CoreWeave's operations on its own. The stock rebounded more than 12% in a single day following that public defense. The underlying numbers cut both ways: CoreWeave posted $863 million in net losses in 2024 despite revenue tripling, with operating losses widening to $748 million through the first three quarters of 2025, but the company also holds a $55 billion revenue backlog and an $11.9 billion contract specifically with OpenAI, and has raised $25 billion in total capital to fund its buildout.
The Real Numbers Behind the Concern
Beyond any single company's stock swings, there's a structural accounting question worth understanding directly. A Fortune analysis in late April 2026 found that once you strip out paper gains on equity stakes in Anthropic from Google's and Amazon's earnings reports, the underlying AI business at both companies is meaningfully less profitable than the headline numbers suggest — a finding that connects directly to Amazon's reported $62.6 billion net income for one recent quarter, which included a one-time $53.4 billion pre-tax gain tied specifically to its Anthropic stake, covered in the previous entry of this series. Bloomberg has maintained a running graphic tracking these interlocking deals since early 2026 specifically because the web keeps expanding rather than resolving, and the IMF's July 2026 World Economic Outlook Update explicitly warned that frothy valuations in AI-exporting economies could correct sharply — a notably blunt assessment from an institution that doesn't typically comment on individual sectors this directly.
The Case That This Isn't Purely Circular
The counterargument deserves equal weight, because it's not simply corporate spin. Nvidia's own chip revenue growth is genuinely enormous and independently verifiable: the company's fiscal Q1 2027 revenue hit $81.6 billion, up 85% year-over-year, a growth rate that reflects real chip shipments regardless of how any single financing arrangement is structured. Gil Luria, a managing director at D.A. Davidson who covers the technology sector, offered a useful, non-alarmist framing: "There's a healthy part and an unhealthy part" to the AI ecosystem, with the unhealthy part specifically marked by related-party transactions rather than the technology's underlying demand being fake. It's also worth noting that several headline deal figures — including the original Nvidia-OpenAI $100 billion arrangement, which Nvidia's own CFO confirmed remained a non-binding letter of intent as of December 2025 — represent stated intentions rather than signed, binding contracts, meaning some portion of the "circular economy" figure being debated may never fully materialize as described.
Major AI Circular Deals at a Glance
| Relationship | Reported size | Status / controversy |
|---|---|---|
| Nvidia → OpenAI investment | Up to $100 billion | Confirmed non-binding letter of intent as of Dec. 2025 |
| OpenAI → Oracle cloud commitment | $300 billion | Oracle stock fell on fears tied to a separate stalled Nvidia deal |
| OpenAI → Microsoft Azure commitment | $250 billion | Closes the loop with Microsoft's 27% OpenAI stake and ~$13B investment |
| Nvidia → CoreWeave equity stake | ~$300 million (7% stake) | CEO disputes it's large enough to be considered "propping up" the company |
| Amazon → Anthropic/OpenAI investment | $83 billion+ combined | $238 billion+ committed back to AWS from the two companies |
Frequently Asked Questions
What does "circular financing" mean in the AI industry?
It describes a pattern where a company like Nvidia invests in an AI lab or cloud provider, that company uses the money and separate compute contracts to pay other infrastructure providers, and those providers use the revenue to buy chips back from Nvidia, creating a closed loop rather than money flowing in from independent external demand.
Is the Nvidia-OpenAI $100 billion deal actually finalized?
As of December 2025, Nvidia's own CFO confirmed it remained a non-binding letter of intent rather than a signed contract. Some reporting suggests OpenAI instead accepted a $30 billion contribution to a funding round in a related but separate arrangement.
Why did CoreWeave's stock crash and then rebound?
CoreWeave fell more than 50% from its peak amid AI demand slowdown fears and circular-financing concerns tied to Nvidia's 7% equity stake, then rebounded over 12% in a single day after CEO Michael Intrator publicly argued Nvidia's roughly $300 million investment was too small to meaningfully support the company's operations.
Is this article investment advice?
No. This is a factual summary of reported deal structures, stock price reactions, and analyst commentary, not investment advice. Anyone considering an investment decision should consult primary financial filings and a licensed financial advisor.