This page may contain stale information. Last updated: 2026-06-28
Definition
Circular financing describes opaque financial arrangements in the AI sector where chipmakers and hyperscalers take equity stakes in AI labs or neocloud providers, who in turn commit to multi-year purchases of chips or compute from those same investors — creating interdependent revenue loops with limited disclosure.
Key Points
- BIS warning (June 2026): Poorly disclosed deals may pledge same assets multiple times; sizable share of sector financing and forward revenue
- Dot-com parallel: Resembles late-1990s vendor financing (Nortel/Lucent lending to customers)
- Examples cited in litigation analysis: nvidia stakes in CoreWeave; OpenAI purchase commitments to Oracle/AWS/CoreWeave flowing back to GPU sales
- Risk: Apparent demand inflation; sudden unwind could trigger debt fire sales and credit market repricing comparable to 2008 per bis