AI’s Circular Money Flows

If you want a sense of the risks that lurk in the great AI-data center investment boom now underway, check out our scoop today about Nvidia’s relationship with CoreWeave, the upstart cloud computing firm planning to go public in a couple of weeks. The story reveals that Nvidia, beyond both investing in CoreWeave and selling chips to it, also agreed two years ago to spend $1.3 billion over several years renting those chips from CoreWeave. That arrangement gave CoreWeave’s business an invaluable early boost, paving the way for further business deals it is riding toward the IPO.

But if the circular arrangement makes you scratch your head, consider this: It’s just one example of several in the AI world where money has traveled in a circle, making the AI business seem bigger than it actually is. At least part of Microsoft’s $13 billion investment in OpenAI went back to the software giant in the form of OpenAI’s spending on Microsoft’s Azure cloud service. Both Amazon and Google have invested billions in Anthropic, which turned around and spent at least part of that money on their cloud services.