Nvidia, OpenAI, Oracle and AMD: How a Few Companies Are Creating a Circular AI Investment Loop

The modern artificial intelligence boom is not just a technological revolution, but a complex web of interdependent deals between giants who simultaneously compete with and support each other.

Today, Nvidia plans to invest in OpenAI, which in turn purchases cloud capacity from Oracle. Oracle buys chips from Nvidia, and Nvidia has a stake in CoreWeave — a company providing AI infrastructure for the same OpenAI.

The result is a peculiar investment loop where money and computing power circulate between the same participants.

A Closed Ecosystem of Big Players

The artificial intelligence market is developing rapidly, with only a few companies remaining at the forefront. They invest in each other to ensure access to colossal resources — both capital and computational.

These deals are already valued at hundreds of billions of dollars, significantly pushing up stock prices on the American market and driving indices to historic highs.

But such concentration of capital among a few raises questions. Experts warn: when money circulates within one ecosystem, it can create an illusion of growth rather than real profitability.

Risks of Overheating and a “Bubble”

Analysts at Oxford Economics remind us of parallels with the dot-com era. Back then, excessive investment in technology companies led to a market crash in the early 2000s.

“The experience from a quarter century ago will not necessarily repeat itself, but the scale of current investments already points to significant risks,” note analysts at Oxford Economics in their research.

If it turns out that AI efficiency and productivity do not meet expectations, a sharp correction in tech giant stocks could hit the entire US economy.

New Deal: OpenAI and AMD

Another link in this chain appeared very recently. OpenAI, the developer of ChatGPT, announced a partnership with AMD — a manufacturer of chips for artificial intelligence.

Under the terms of the deal, OpenAI will purchase AMD processors (the amount is not disclosed), and in return will receive the right to a stake of up to 10% in the semiconductor company.

Less than a month before this, Nvidia promised to invest up to $100 billion in OpenAI itself.

“Excited to partner with AMD and use their chips to serve our users!” — wrote OpenAI CEO Sam Altman on X (formerly Twitter).

Interestingly, AMD and Nvidia are direct competitors, which makes these financial entanglements even more paradoxical. Nvidia representatives declined to comment on whether funds invested in OpenAI would indirectly go toward purchasing their rival’s chips.

Doomsday Scenario: Will AI Repeat the Dot-Com Bubble?

Some analysts look at the Nvidia and OpenAI deal and experience déjà vu. This has all happened before — in the late 90s, when the dot-com bubble was inflating.

Back then, in March 2000, the Nasdaq Composite index crashed by 77%, wiping out billions of dollars in market value of technology companies. It took 15 years for the market to return to its previous highs.

History May Repeat Itself

“There’s a healthy and unhealthy part of the AI ecosystem,” says Gil Luria, managing director at DA Davidson, specializing in technology.

According to him, the unhealthy part is “related-party transactions,” where the same companies invest in each other, creating a closed loop that artificially supports their valuations.

If investors decide that ties between giants are becoming too close, the market could “cool down.” On Wall Street, this is usually called simply: a burst bubble.

Altman: “This Is a Normal Cycle”

OpenAI CEO Sam Altman is trying to cool down talk of an impending collapse.

He claims that ups and downs are a natural part of any industry’s evolution:

“Between the ten years we’ve already been working and the decades ahead, there will be ups and downs. People will invest too much — and lose money. They will invest too little — and miss out on returns.”

So. Much. Money.

Despite talk of a “bubble,” appetite for AI investment remains insatiable.

Risks are still outweighed by the possibility of enormous profits — and that’s exactly what Wall Street lives and breathes.

Many investors today aren’t thinking about whether the current pace of AI progress is real, but about something else: will companies be able to earn fast enough to justify hundreds of billions in investments?

“For this massive experiment not to end in disaster, OpenAI and its partners must generate enormous revenues and profits — to pay off all obligations while also providing returns to investors.”

Illusion of Growth or a New Era?

While tech stocks are rising and investors are getting richer, few want to talk about the “doomsday scenario.”

As of mid-week, more than 35% of the entire S&P 500 market capitalization — that’s $20 trillion — was accounted for by just seven technology companies, which Wall Street has dubbed the “Magnificent Seven.”

These are Apple, Alphabet (Google), Amazon, Meta (Facebook), Microsoft, Nvidia, and Tesla — and each of them is actively investing in artificial intelligence.

In the end, while everyone chases the next “AI revolution,” the question remains the same:

Is this a technological renaissance — or a new bubble just waiting to be popped?

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