The $1 Trillion AI Circular Economy: OpenAI's Unprecedented Deal Network with Nvidia, AMD, and Oracle

The Trillion-Dollar AI Merry-Go-Round Spins Faster

OpenAI has orchestrated the most ambitious circular investment network in technology history, signing approximately $1 trillion in computing deals this year that create an unprecedented web of interdependencies with industry giants Nvidia, AMD, and Oracle. These arrangements go far beyond traditional supplier relationships—they represent a new form of "circular economy" where companies invest in each other while simultaneously becoming major customers, creating a self-reinforcing loop that either propels AI to new heights or sets the stage for a spectacular collapse. With OpenAI alone committing to over 20 gigawatts of computing capacity—equivalent to the output of 20 nuclear reactors—while burning $2.5 billion in the first half of 2025, the deals raise fundamental questions about sustainability and bubble risk in the AI ecosystem.

❓ What Exactly Is OpenAI's Trillion-Dollar Deal Network?

OpenAI's deal network represents the most complex and financially significant circular investment structure ever created in the technology sector. The $1 trillion in commitments spans multiple partnerships designed to solve OpenAI's massive infrastructure needs while creating unprecedented interdependencies between AI's biggest players.

The core deals include:

Partner	Deal Value	Capacity/Structure	Circular Element
Nvidia	Up to $500 billion over 10 years	10 gigawatts GPU capacity	Nvidia invests $100B in OpenAI, receives chip orders
AMD	Up to $300 billion multi-year	6 gigawatts GPU capacity	OpenAI gets 10% equity warrants in AMD
Oracle	$300 billion over 5 years	4.5 gigawatts cloud capacity	Stargate partnership, Oracle provides infrastructure
CoreWeave	Over $22 billion disclosed	Cloud computing services	OpenAI invested $350M in CoreWeave pre-IPO

The arrangements create multiple layers of circularity. In the Nvidia deal, the chipmaker invests up to $100 billion in OpenAI, which then uses much of that capital to purchase Nvidia GPUs for data centers. Wall Street research firm New Street Research estimates that for every $10 billion Nvidia invests in OpenAI, it receives approximately $35 billion back in chip purchases or lease payments.

The AMD structure introduces even more complexity through equity warrants. OpenAI can acquire up to 160 million AMD shares—representing 10% of the company—for just one cent per share upon hitting certain milestones. As AMD's stock appreciates, OpenAI can cash in these warrants to fund additional AMD chip purchases, creating a self-perpetuating cycle tied to stock market performance.

❓ How Does the Stargate Project Anchor This Circular Economy?

The Stargate Project serves as the physical manifestation of OpenAI's trillion-dollar deal network, transforming abstract financial commitments into concrete AI infrastructure across the United States. Announced in January 2025 with President Trump at the White House, Stargate represents a $500 billion commitment to build 10 gigawatts of AI data center capacity—making it the largest private infrastructure project in American history.

The project's structure demonstrates the interconnected nature of the AI circular economy:

Core Partners and Roles:

• SoftBank: Primary financial responsibility, $19 billion initial commitment, 40% ownership
• OpenAI: Operational responsibility, $19 billion initial commitment, 40% ownership
• Oracle: Cloud infrastructure provider, data center development and operation
• MGX: Additional equity funding partner

Technology Integration:

• Nvidia: Core technology partner providing millions of GPUs across all sites
• Oracle Cloud Infrastructure (OCI): Underlying platform for data center operations
• Microsoft Azure: Continued partnership for additional compute capacity

Current Progress:

As of September 2025, Stargate has expanded to nearly 7 gigawatts of planned capacity with five new sites announced across Texas, New Mexico, Ohio, and the Midwest. The flagship Abilene, Texas facility is already operational, with Oracle delivering the first Nvidia GB200 racks in June 2025. Combined with CoreWeave projects, total investment now exceeds $400 billion over three years.

The circular nature becomes clear when examining cash flows: SoftBank and OpenAI fund Stargate, which contracts with Oracle for data centers equipped with Nvidia chips, while Nvidia simultaneously invests in OpenAI and maintains significant stakes in related companies like CoreWeave.

❓ What Are the Financial Mechanics Behind These Circular Deals?

The financial architecture of OpenAI's deal network reveals sophisticated structures that blur the lines between investment, procurement, and partnership arrangements. These mechanisms enable OpenAI to access massive computing resources while distributing financial risk across multiple counterparties who also serve as investors and equity partners.

Nvidia's Investment-Customer Loop:

Nvidia's $100 billion commitment to OpenAI operates through a letter of intent structure where Nvidia essentially pre-pays for future chip purchases. OpenAI receives capital to build data centers, then uses that money to buy Nvidia GPUs at potentially preferential pricing. This arrangement guarantees Nvidia a massive customer while giving OpenAI access to scarce GPU capacity during high-demand periods.

AMD's Equity-for-Capacity Model:

The AMD arrangement represents the most innovative structure in the network. Rather than traditional financing, OpenAI receives warrants for 10% of AMD's stock in exchange for committed GPU purchases over multiple years. If AMD's stock appreciates—which it did by 20% the day the deal was announced—OpenAI can exercise these warrants and use the proceeds to fund additional chip purchases, creating a self-funding mechanism tied to market performance.

Oracle's Infrastructure Partnership:

The Oracle relationship combines traditional cloud services with joint venture structures through Stargate. Oracle provides data center capacity and cloud infrastructure while co-investing in the underlying facilities. This spreads infrastructure costs across multiple parties while ensuring Oracle captures both construction and operational revenue streams.

Risk Distribution and Concentration:

While these structures distribute financial risk across multiple parties, they also create concentrated interdependency risks. If OpenAI encounters financial difficulties, it could simultaneously impact Nvidia (lost customer), AMD (warrant dilution), Oracle (reduced capacity utilization), and CoreWeave (computing contracts), creating cascading effects across the entire AI supply chain.

As DA Davidson analyst Gil Luria noted, "OpenAI is in no position to make any of these commitments" based on current financial performance, with the company projected to lose about $10 billion in 2025 against $4.3 billion in first-half revenue.

❓ Why Are Analysts Warning About Bubble Risk?

Financial analysts and industry veterans are increasingly vocal about bubble risks created by OpenAI's circular deal network, drawing parallels to speculative financing structures that preceded major technology crashes. The concern centers on whether these arrangements represent genuine economic activity or sophisticated financial engineering that artificially inflates valuations and demand.

Historical Parallels and Warning Signs:

Veteran short seller Jim Chanos, who famously predicted the Enron collapse, highlighted a key contradiction: "Don't you think it's a bit odd that when the narrative is 'demand for compute is infinite,' the sellers keep subsidizing the buyers?" This echoes patterns from the dot-com era, when companies engaged in circular revenue deals to maintain growth appearances.

Morningstar analyst Brian Colello warned: "If we get to a point a year from now where we had an AI bubble and it popped, this deal might be one of the early breadcrumbs," referring specifically to the Nvidia-OpenAI arrangement.

Financial Reality vs. Market Expectations:

The mathematics appear increasingly disconnected from underlying business fundamentals:

• Revenue Gap: OpenAI's $1 trillion in commitments dwarf its $500 billion valuation and projected $8.6 billion annual revenue run rate
• Cash Burn Rate: The company burned $2.5 billion in the first half of 2025 while committing to infrastructure spending that would require $50 billion per gigawatt to deploy
• Market Concentration: The circular deals concentrate risk among a handful of players, creating systemic vulnerabilities

Systemic Risk Indicators:

Analysts identify several concerning patterns reminiscent of past bubbles:

• Self-Reinforcing Valuations: Companies' stock prices rise based on deals with each other, creating artificial market validation
• Capital Misallocation: Massive investments in infrastructure without clear demand validation from end customers
• Complexity Masking Risk: Sophisticated deal structures that obscure underlying financial relationships and dependencies

Bernstein Research analyst Stacy Rasgon captured the stakes: Altman "has the power to crash the global economy for a decade or take us all to the promised land. Right now we don't know which is in the cards."

❓ How Do Industry Leaders Defend the Circular Economy Model?

Despite mounting criticism, key industry leaders maintain that the circular deal structure represents rational investment in transformative technology rather than speculative bubble behavior. Their defense centers on the argument that AI demand is real, growing exponentially, and requires unprecedented infrastructure investments that traditional financing cannot support.

Nvidia CEO Jensen Huang's Defense:

In a recent CNBC interview, Huang directly addressed bubble concerns by emphasizing fundamental differences from past technology crashes. "The difference between this time and the other times is tokens," Huang explained, referring to the unit economics of AI computing. He argued that unlike the dot-com era when "most of the applications weren't useful enough to pay for," current AI applications generate measurable economic value.

Huang emphasized that the AI infrastructure buildout is still in early stages: "We're a couple hundred billion dollars into a multi-trillion-dollar buildout" representing the transition from "classical CPU-based computing" to "generative AI computing powered by GPUs."

OpenAI's Strategic Rationale:

CEO Sam Altman defended the aggressive infrastructure investments during a recent developers' event, stating: "I've never been more confident in the research roadmap in front of us and also the economic value that will come from using those [future] models." He positioned the spending as necessary to maintain competitive advantage in the race toward artificial general intelligence (AGI).

Altman acknowledged that profitability "is not in my top-10 concerns" currently, arguing that the company is in "a phase of investment and growth" that requires industry-wide collaboration: "To make the bet at this scale we kind of need the whole industry, or big chunk of the industry, to support it."

Industry Ecosystem Perspective:

CoreWeave CEO Michael Intrator dismissed circular financing concerns by pointing to end-customer demand: "When Microsoft comes to us to buy infrastructure to deliver to its clients who are consuming 365 or Copilot, I don't care what the narrative is about circular financing. They have end users that are consuming it."

OpenAI's Fidji Simo, chief executive of applications, argued that massive infrastructure investments represent "the new normal to meet skyrocketing user demand" rather than speculative overbuilding.

Demand Validation Arguments:

Proponents point to several indicators supporting genuine demand growth:

• Enterprise AI adoption accelerating across industries
• Consumer applications like ChatGPT demonstrating sustained user engagement
• Microsoft, Google, and Amazon independently investing hundreds of billions in AI infrastructure
• Growing waiting lists for GPU capacity indicating supply constraints rather than demand weakness

❓ What Are the Broader Economic Implications?

OpenAI's trillion-dollar circular economy extends far beyond Silicon Valley, creating ripple effects across the entire U.S. economy while raising fundamental questions about sustainable growth and capital allocation. Economic analysts suggest that AI infrastructure spending is currently propping up American economic growth, but this dependence creates both opportunities and vulnerabilities.

Macroeconomic Impact:

Deutsche Bank's George Saravelos noted in September that "AI machines—in a literal sense—appear to be saving the US economy right now." Without technology-related investments, the U.S. would be "close to, or in, recession this year." This analysis is supported by Nobel Prize-winning economist Paul Krugman, who observed that AI firms are "pouring hundreds of billions into AI infrastructure and development" while other companies allocate substantial funds toward AI products.

The scale becomes clear when considering aggregate spending: Big Tech companies are projected to spend approximately $400 billion in 2025 on AI infrastructure alone—more than the Apollo program adjusted for inflation and representing funds equivalent to Singapore's annual GDP.

Employment and Regional Development:

The Stargate project alone promises to create over 25,000 onsite jobs across its five initial locations, with tens of thousands of additional positions throughout supply chains. However, these employment gains concentrate in specific regions and skill sets, potentially exacerbating geographic and educational inequality.

Energy and Resource Implications:

OpenAI's 20+ gigawatt commitment requires electricity equivalent to 20 nuclear reactors' output, straining power grids and raising questions about sustainable energy sourcing. The infrastructure demands extend to rare earth minerals, advanced semiconductors, and specialized construction capabilities, creating bottlenecks throughout the supply chain.

Systemic Financial Risk:

Bain & Company consultants estimate that AI infrastructure spending will require $2 trillion in annual AI revenue by 2030 to justify current investment levels. If this revenue fails to materialize, the resulting correction could ripple through financial markets, employment, and the broader economy.

The interconnected nature of the deals amplifies potential impacts: a significant setback for OpenAI could simultaneously affect Nvidia's revenue, AMD's growth prospects, Oracle's capacity utilization, and the broader AI supply chain, creating cascading effects similar to but potentially larger than the 2000 dot-com crash.

❓ Real-World Case Study: The CoreWeave Connection

The relationship between OpenAI and CoreWeave illustrates how circular financing structures create complex webs of interdependence that extend far beyond simple buyer-seller relationships, demonstrating both the potential benefits and risks of the AI circular economy.

The Multi-Layered Relationship:

CoreWeave, a cloud computing company that went public on NASDAQ in March 2025, sits at the center of multiple circular arrangements:

• Nvidia Backing: Nvidia holds a 7% stake in CoreWeave and maintains a $6.3 billion backstop agreement for cloud services
• OpenAI Investment: OpenAI invested $350 million in CoreWeave ahead of its IPO and expanded cloud computing agreements to $22.4 billion
• Equipment Financing: CoreWeave funded some debt using Nvidia GPUs as collateral, while Nvidia agreed to purchase excess capacity through 2032

Circular Value Creation:

The arrangement creates multiple value loops. CoreWeave purchases Nvidia GPUs to build cloud infrastructure, which it rents to companies like OpenAI. Nvidia's investment and purchase commitments enable CoreWeave to expand capacity, requiring more Nvidia chips. OpenAI's investment and computing contracts provide CoreWeave with capital and guaranteed revenue, while giving OpenAI preferential access to scarce GPU capacity.

Financial Performance:

The circular relationships have delivered measurable results for all parties:

• CoreWeave: Successfully completed IPO with strong market reception based on guaranteed revenue streams
• OpenAI: Secured access to computing capacity during periods of extreme scarcity in the GPU market
• Nvidia: Locked in long-term customer commitments while maintaining strategic influence through equity stakes

Risk Concentration:

However, the arrangement also demonstrates potential vulnerabilities. If OpenAI reduces its computing needs or encounters financial difficulties, CoreWeave's revenue projections would suffer, potentially affecting its ability to service Nvidia-collateralized debt. This could simultaneously impact Nvidia's customer base and investment returns, creating interconnected losses.

CEO Michael Intrator acknowledges these concerns but maintains confidence: "They have end users that are consuming it," pointing to enterprise customers like Microsoft as evidence of genuine underlying demand rather than artificial financial engineering.

🚫 Common Misconceptions About the AI Circular Economy

Misconception 1: Circular Deals Are Inherently Fraudulent or Deceptive

Reality: While circular arrangements can mask underlying weakness, they can also represent legitimate strategic partnerships in capital-intensive industries. The key distinction lies in whether they support genuine economic activity or artificially inflate metrics without creating real value.

Misconception 2: All AI Infrastructure Investment Represents Bubble Behavior

Reality: Some infrastructure investment reflects legitimate demand growth and technological transition. The concern is whether the scale and financing structures match realistic demand projections and sustainable business models.

Misconception 3: Circular Deals Are Unique to the AI Industry

Reality: Similar arrangements existed during previous technology buildouts, including railroads, telecommunications, and internet infrastructure. The patterns raise concerns because of their scale and concentration, not their mere existence.

Misconception 4: The Circular Economy Will Inevitably Collapse

Reality: If AI applications deliver sufficient economic value to justify infrastructure investments, circular arrangements could evolve into sustainable business relationships. The risk lies in timing mismatches between investment and revenue realization.

Misconception 5: Only Financial Engineers Understand These Complex Deals

Reality: While structures are sophisticated, the fundamental question is simple: do AI applications generate enough value to justify the infrastructure investments and financial commitments being made?

❓ Frequently Asked Questions

Q: How is the AI circular economy different from previous tech bubbles?

A: The current situation differs in scale and sophistication. While dot-com era companies engaged in revenue swaps and artificial demand creation, today's AI deals involve actual infrastructure deployment and measurable computing services. However, the circular financing structures and valuation levels raise similar concerns about sustainability.

Q: What would trigger a collapse of the circular economy?

A: Key triggers could include: OpenAI's inability to generate sufficient revenue to support its commitments, a broader market correction reducing access to capital, regulatory restrictions on AI development, or technological breakthroughs that make current infrastructure obsolete.

Q: Are there alternatives to circular financing for AI infrastructure?

A: Traditional project finance, government funding, and utility-style regulation represent potential alternatives. However, the scale and risk of AI infrastructure development may require innovative financing approaches, making some circular arrangements inevitable.

Q: How should investors evaluate companies involved in circular AI deals?

A: Focus on underlying business fundamentals rather than headline deal values. Examine customer diversity, end-user demand validation, cash flow sustainability, and whether circular relationships enhance or obscure genuine business performance.

📝 Key Takeaways

• Unprecedented scale and complexity—OpenAI's $1 trillion in deal commitments creates the most sophisticated circular investment network in technology history, involving Nvidia, AMD, Oracle, and others in interconnected arrangements
• Financial engineering meets infrastructure reality—Deals combine traditional procurement with equity investments, warrants, and joint ventures, creating self-reinforcing loops where companies invest in each other while becoming major customers
• Bubble warnings intensify across Wall Street—Analysts from Morningstar, Bernstein, and New Street Research warn that circular financing structures mask underlying financial weaknesses and create systemic risks reminiscent of dot-com era speculation
• Industry leaders defend legitimate demand—Nvidia's Jensen Huang and OpenAI's Sam Altman argue that AI applications generate real economic value justifying massive infrastructure investments, unlike previous speculative bubbles
• Economic implications extend beyond Silicon Valley—AI infrastructure spending currently supports U.S. economic growth, but dependence creates vulnerabilities if investments fail to generate projected returns
• Success or failure will define the next decade—The trillion-dollar circular economy will either accelerate AI's transformative potential or create cascading failures across the technology sector and broader economy

Conclusion

OpenAI's trillion-dollar circular economy represents either the most sophisticated financing innovation in technology history or the most elaborate house of cards ever constructed in Silicon Valley. The unprecedented network of interdependent deals with Nvidia, AMD, Oracle, and others creates possibilities for acceleration and collaboration that traditional financing structures could never support—but also concentrates risk in ways that could magnify any eventual collapse.

The fundamental question is not whether these arrangements are circular—they clearly are—but whether they support genuine economic transformation or merely financial engineering. The massive infrastructure investments and computing commitments could enable breakthroughs in artificial intelligence that justify every dollar spent and create sustainable competitive advantages for decades to come. Alternatively, they could represent the most expensive speculative bet in business history, creating systemic vulnerabilities that dwarf previous technology bubbles.

What makes this moment particularly significant is that we won't have to wait long for answers. With OpenAI burning billions annually while committing to trillion-dollar infrastructure projects, the circular economy will either demonstrate its value through revolutionary AI capabilities and sustainable business models within the next 18-24 months, or reveal itself as an unsustainable financial structure that creates exactly the kind of cascading collapse that skeptics fear.

The stakes could not be higher. As Bernstein analyst Stacy Rasgon observed, the outcome will either "crash the global economy for a decade or take us all to the promised land." The trillion-dollar merry-go-round spins faster each month, and the world watches to see whether it leads to transformation or catastrophe.