The rapid ascent of the artificial intelligence (AI) industry is transforming both technology and the global economy. However, beneath the surface of eye-popping valuations and dazzling technological innovation lies a network of financial interdependence among a handful of tech giants. Recent deals connecting companies such as OpenAI, Nvidia, AMD, Oracle, CoreWeave, and SoftBank have driven the market to new heights, but are now sparking concerns over the potential risks of circular, insular investments and the specter of a modern tech bubble.

The Interlinked Web of AI Deals

In the past year, the world’s leading AI and cloud infrastructure companies have entered into a remarkable sequence of intertwined investments and supply agreements:

• Nvidia is reportedly planning to invest up to $100 billion in OpenAI, one of the hottest names in the AI race and creator of ChatGPT.
• OpenAI recently struck a deal with AMD, agreeing to buy AMD’s AI chips in exchange for the potential to take up to a 10% stake in AMD, further deepening its technological ties with key semiconductor providers.
• Oracle, a leading cloud services provider, is investing $40 billion to purchase Nvidia chips to power OpenAI’s massive data center expansion.
• CoreWeave, a rapidly growing AI cloud-computing provider, sells Nvidia systems to OpenAI and counts Nvidia among its largest investors.
• SoftBank has joined Oracle and OpenAI for a planned $500 billion investment in the mega-scale “Stargate” data center initiative. Notably, SoftBank also holds a $3 billion stake in Nvidia.

Collectively, these deals represent hundreds of billions of dollars in capital flows, fueling not only technological innovation but also a powerful upward force on stock prices. As of October 2025, Nvidia holds a market valuation exceeding $4.5 trillion, following a meteoric rise. Tech stock indexes like the S&P 500 and Nasdaq Composite have surged to record territory, with more than 35% of the S&P 500’s total market value concentrated in just seven large technology companies.

Insular Growth and Bubble Risks

While the momentum in AI appears unstoppable, analysts are increasingly scrutinizing the insular nature of these capital flows. The rapid and mutual investments among a small circle of firms evoke memories of the 1990s dot-com bubble, which ultimately saw the Nasdaq Composite crash by over 75% in March 2000. Some observers argue that the current cycle could be setting up a similar risk—where a downturn in one major company’s fortunes might spark a domino effect, destabilizing the entire ecosystem.

Oxford Economics cautioned in a recent brief that the “increased risk-taking” among tech giants could leave them vulnerable should expectations for AI-driven productivity gains fail to materialize quickly enough. “A sharp correction in tech stocks, with negative knock-ons for the real economy, would be very likely” if AI’s lofty promises prove slow to pay off, the research firm wrote.

The Mechanics of Circular Funding

The so-called “circular” nature of AI investment refers to situations where companies are simultaneously vendors and investors for each other, creating feedback loops of money and demand. For instance, Nvidia invests in OpenAI, which in turn uses the funds to purchase Nvidia’s chips, while CoreWeave—a major Nvidia backer—provides infrastructure to OpenAI. Oracle and SoftBank’s involvement further layers the mutual dependencies.

This climate of related-party transactions can artificially bolster the perceived value and growth potential of the companies involved. According to Gil Luria, managing director at D.A. Davidson, “The unhealthy part [of the ecosystem] has become marked by related-party transactions … which can artificially prop up the value of the firms involved.” If capital markets begin to doubt the underlying fundamentals, the result could be a swift correction in stock prices—Wall Street’s euphemism for a bubble burst.

Market Titans and Mammoth Capital Requirements

Despite these dangers, the near-term momentum has been powered by investors’ optimism and the sheer capital requirements of AI innovation. The leading AI firms remain household names and dominate the U.S. equity landscape. The so-called “Magnificent 7″—Apple, Alphabet (Google), Amazon, Meta (Facebook), Microsoft, Nvidia, and Tesla—collectively account for over $20 trillion in market value and are all engaged in AI ventures, either as developers or infrastructure providers.

OpenAI’s CFO, Sarah Friar, acknowledged in a recent CNBC interview that the company requires enormous investment to continue scaling its operations and meet growing demand for advanced AI solutions. Meanwhile, companies like Nvidia and AMD continue to roll out next-generation chips, pushing the boundaries of what AI can achieve in fields ranging from autonomous vehicles to healthcare and finance.

Nvidia CEO Jensen Huang recently described these investments as bets on the creation of the next multitrillion-dollar company, emphasizing faith in the sector’s long-term revenue potential. But as the pace of deals accelerates, the underlying question persists: Can actual revenues and profits justify these valuations before the music stops?

Comparisons to the Dot-Com Era

The echoes of the late 1990s are hard to ignore. During the dot-com bubble, waves of speculative capital flooded internet-related businesses that often failed to produce sustainable profits. After the bubble burst, it took 15 years for the Nasdaq to regain its pre-crash highs. Many investors worry that today’s AI ecosystem, powered by both hype and genuine innovation, could experience similar volatility if market sentiment shifts or productivity gains stall.

Peter Boockvar, CIO of OnePoint BFG Wealth Partners, notes that for the current AI “experiment” to succeed, these firms will have to deliver not only pioneering technology but also immense financial returns. “[OpenAI] and its peers now have got to generate huge revenues and profits to pay for all the obligations they are signing up for and at the same time provide a return to its investors,” Boockvar observed in a recent analysis.

Industry Leadership Looks Ahead

Recognizing that the AI sector will likely endure cycles of boom and bust, OpenAI CEO Sam Altman remains sanguine. Speaking at the company’s colossal data center construction site in Abilene, Texas, Altman suggested, “Between the ten years we’ve already been operating and the many decades ahead of us, there will be booms and busts. People will over-invest and lose money, and underinvest and lose revenue.” Such candid assessments reveal an industry that, for now, is eager to ride the wave of capital and innovation for as long as the market allows.

As AI’s influence rapidly expands across industries, investors face a paradox: while the potential rewards are enormous, so too are the risks if expectations become decoupled from reality. Whether this web of speculative and circular investments will ultimately catalyze a crash or lay the foundation for an enduring technology revolution remains to be seen.