AI companies are engaging in circular spending patterns to artificially inflate revenues for fundraising, creating unsustainable business models
Too little corroboration in the last 3 days to call a trend (3 articles). Watching for it to gain traction.
"Circular financing will end badly. You are living on not just borrowed time, but levered time. It brings back bad memories of the dotcom bubble, when some telecom equipment companies lent money to customers to buy their gear."
"The developments arguably have a bearish edge as well, considering they exacerbated concerns over circular financing in AI and arguably further exposed the world's biggest company to potential sector instability."
"CDS trader Michael Burry posted, 'There is a reason Nvidia's five-year credit default swaps are going parabolic.' The short-seller blamed circular spending, i.e. companies buying services from one another in order to manufacture higher revenue for fundraising purposes."