Financial Ouroboros
How Are Circular Deals Shaping the AI Sector?
The Ouroboros, one of the most interesting symbols from ancient alchemy, shows a snake eating itself. It represents both an endless cycle and a system that destroys itself. Today, when we look at the financial structure of the artificial intelligence sector, we see a modern version of this old symbol: Investors give money, the companies that receive this money buy products from the investors, and the cycle continues without stopping. But can this snake turn forever, or will it eat itself in the end?
The artificial intelligence sector is entering 2026 as a huge market that is expected to reach 2.5 trillion dollars globally. However, behind these huge numbers, there is a complex and controversial investment model that financial circles call “circular financing” or “financial ouroboros.” I want to look at this topic - this new financial structure in the AI world, the biggest players, and the risks this model carries.
What Does Circular Deal and Investment Mean?
Circular financing is a closed-loop system where a supplier (usually a chip maker or cloud provider) is also the main investor in its own customer. In this model, Company A puts money into Company B, and Company B uses this money to buy products or services from Company A.
This system is different from traditional venture capital because the money moves between the same hands. This way, the investor company increases both its sales and the value of its investment portfolio on paper at the same time, raising its market value. In the AI sector, this usually happens as cloud credits instead of cash, or as promises of priority access to highly demanded GPUs (graphics processing units).
A Giant Example from the Sector: The Nvidia, OpenAI and Oracle Triangle
The most concrete example of this circular structure is the symbiotic relationship between Nvidia, OpenAI, and Oracle. Nvidia invests billions of dollars in OpenAI and promises more, while it is also this company’s biggest hardware supplier. OpenAI uses chips it gets from Nvidia and also uses Oracle’s cloud infrastructure to train its models.
Oracle is expanding its data centers by buying billions of dollars worth of chips from Nvidia to host OpenAI’s software. In this huge cycle, OpenAI is expected to pay approximately 300 billion dollars to Oracle alone in the next five years. Also, with the “Stargate” project, these companies aim to build processing capacity up to 30 gigawatts across the US. However, recent reports showed that Nvidia froze or reduced its 100 billion dollar investment plan for OpenAI because of “lack of discipline” concerns, revealing how fragile such deals can be.
The Magnificent Seven
The capital flow in the AI sector is dominated by tech giants known as “The Magnificent Seven” and a few strategic players:
Microsoft: OpenAI’s biggest supporter. It has a 13.8 billion dollar equity investment in OpenAI. In return, it has received a 250 billion dollar cloud service commitment that will last until 2032.
Nvidia: It is not just a chip maker, it has become a central financier that invests tens of billions of dollars in cloud providers like CoreWeave and model developers like OpenAI.
Amazon: It invested 8 billion dollars in Anthropic and connected the company to the AWS ecosystem. Also, there were news reports that it was in talks to invest up to 50 billion dollars in OpenAI.
SoftBank: A key partner in the 500 billion dollar “Stargate” project for AI infrastructure. It played a big role in OpenAI reaching a 500 billion dollar valuation.
Google: It invested 2 billion dollars in Anthropic and plans to spend 75 billion dollars in 2025 for its own AI development processes.
Meta: It has committed billions of dollars in capital spending for AI infrastructure. It is also known to be in talks with Oracle for a cloud computing deal worth approximately 20 billion dollars.
xAI: xAI spent 20 billion dollars to buy and rent Nvidia GPUs.
Actually, in sources, Apple appears instead of SoftBank in this “Magnificent Seven” list. That is the experts’ list. But since Apple’s contribution(!) to the AI sector is quite small compared to SoftBank, I made this small update to the list.
Critical Risks
Although circular deals speed up innovation, this model clearly carries serious structural risks:
AI Bubble: Companies’ valuations are based on future market dominance projections and revenue numbers inflated by circular investments, rather than their current profitability. This situation has similarities with the dot-com bubble of the early 2000s. And this is very scary.
Artificial Demand Signals: When revenues come from investor-backed spending, it makes it difficult to determine the real size of external market demand. If end users don’t pay enough for these services, the ecosystem can become unsustainable.
Concentration and Counterparty Risk: Risks are concentrated among a small group of players. For example, if OpenAI goes into financial trouble, it could shake Oracle’s balance sheet, which has devoted huge capacity to it, and could pull down Nvidia’s sales.
Regulatory and Antitrust Issues: These kinds of “related party transactions” can lead to transparency problems in financial reporting and can violate antitrust laws. Closed ecosystems can kill competition by blocking new competitors’ access to necessary processing power.
Lack of Transparency: Many circular deals stay hidden in the footnotes of financial statements, making it difficult for investors to track real cash flow.
Conclusion
Although circular financing has managed to build the physical infrastructure of the AI revolution in record time, this “financial ouroboros” structure leaves the market vulnerable to liquidity crises and systemic shocks. 2026 will be a critical year of separation that will determine whether these investments turn into real economic value or not. Now it would be healthiest for these giant companies to spread their investments among themselves to a wider area. There is no need to write what will happen if all eggs are in the same basket.