It's a massive red flag if the company is using it to inflate their revenue, or using debt based tools. Stock swap based vendor financing is a bit less red since nvidia/amd could get their investment back by unloading openai stock on other investors instead of waiting for their cashflows to ramp up.
To me, a deal around hardware is not a red flag when growth requires additional hardware.
The circular investments that would worry me are when the investment returns as advertising spend and other costs that don’t improve the product.
Recent headlines grabbing deals are between pretty savvy companies and none of them appear on the verge of bankruptcy. There doesn’t appear to be an air of desperation about them.
They don’t look like shuffling deck chairs so much as negotiated procurement.
The funny thing is that everybody knows how this all ends. The only question is when. And I must admit, it's absolutely fascinating to watch.
I was quite young when the dot com bubble happened and didn't grasp the whole insanity of it, then witnessed the financial crisis (while also working in finance - quite interesting times), and now I can fully appreciate Sir Isaac Newton statement "I can calculate the motions of the planets, but I cannot calculate the madness of men" - which he made after he lost a fortune in the South Sea Company Bubble !
Who cares honestly? Get your bag and move on. Remember, the “investors” don’t hold the bag either and they try to offload asap to move on to the next shit.
Ie selling or leveraging when it makes sense. You can always hop on later.
In theory, expect even higher amounts of "virtual" money being circulated (stock options deals), until people stop believing in it.
It's the time you can be certain that NASDAQ will go only up.
Until it doesn't.
Then we will learn how much money came from banks financing either directly those GPU deals, or indirectly (energy, infra etc).
Lots of depreciation will happen.
Then banks will start posting huge lossess, and then FED will need to rescue it all, because it goes on a spiral and can end up worse if they don't do anything.
It is. What you're describing is what used to be called financial velocity without value creation.
We're watching a cycle where companies raise, reinvest, and report "growth" that's mostly internal money circulation — cloud credits, infra leases, or pre-paid AI capacity deals that move cash between subsidiaries or friendly vendors. None of it produces new productivity; it just inflates asset books.
Big Tech's current AI spending is a perfect example. Microsoft, Google, Amazon, and Meta will spend around $364 billion on infrastructure this year — roughly double their historical capex ratios. Yet revenue growth in their core businesses is slowing. They're scaling faster than they can monetize, essentially subsidizing the appearance of progress.
The real red flag is cultural: when companies optimize for spend instead of outcomes, engineering starts following the same pattern — more abstraction, more compute, less efficiency. Eventually, both finance and technology hit physical limits.
It's a massive red flag if the company is using it to inflate their revenue, or using debt based tools. Stock swap based vendor financing is a bit less red since nvidia/amd could get their investment back by unloading openai stock on other investors instead of waiting for their cashflows to ramp up.
To me, a deal around hardware is not a red flag when growth requires additional hardware.
The circular investments that would worry me are when the investment returns as advertising spend and other costs that don’t improve the product.
Recent headlines grabbing deals are between pretty savvy companies and none of them appear on the verge of bankruptcy. There doesn’t appear to be an air of desperation about them.
They don’t look like shuffling deck chairs so much as negotiated procurement.
The funny thing is that everybody knows how this all ends. The only question is when. And I must admit, it's absolutely fascinating to watch.
I was quite young when the dot com bubble happened and didn't grasp the whole insanity of it, then witnessed the financial crisis (while also working in finance - quite interesting times), and now I can fully appreciate Sir Isaac Newton statement "I can calculate the motions of the planets, but I cannot calculate the madness of men" - which he made after he lost a fortune in the South Sea Company Bubble !
Yes
Who cares honestly? Get your bag and move on. Remember, the “investors” don’t hold the bag either and they try to offload asap to move on to the next shit.
Ie selling or leveraging when it makes sense. You can always hop on later.
It's the final phase of the cycle.
In theory, expect even higher amounts of "virtual" money being circulated (stock options deals), until people stop believing in it.
It's the time you can be certain that NASDAQ will go only up.
Until it doesn't.
Then we will learn how much money came from banks financing either directly those GPU deals, or indirectly (energy, infra etc).
Lots of depreciation will happen.
Then banks will start posting huge lossess, and then FED will need to rescue it all, because it goes on a spiral and can end up worse if they don't do anything.
Yes
It is. What you're describing is what used to be called financial velocity without value creation.
We're watching a cycle where companies raise, reinvest, and report "growth" that's mostly internal money circulation — cloud credits, infra leases, or pre-paid AI capacity deals that move cash between subsidiaries or friendly vendors. None of it produces new productivity; it just inflates asset books.
Big Tech's current AI spending is a perfect example. Microsoft, Google, Amazon, and Meta will spend around $364 billion on infrastructure this year — roughly double their historical capex ratios. Yet revenue growth in their core businesses is slowing. They're scaling faster than they can monetize, essentially subsidizing the appearance of progress.
The real red flag is cultural: when companies optimize for spend instead of outcomes, engineering starts following the same pattern — more abstraction, more compute, less efficiency. Eventually, both finance and technology hit physical limits.
If you're interested, I broke down the numbers and engineering side of this dynamic here: https://techtrenches.substack.com/p/big-techs-364-billion-be...