Archive · 10 Nov 2025
OpenAI's Deals Fuel AI Speculation, Echoing Dot-Com Bubble
Imagine a company building a huge new playground, promising lots of kids will play there.
They borrow tons of money to buy the best swings and slides, and the companies selling them these toys also invest a little bit in the playground.
It's like everyone is promising each other that lots of kids will come, so they keep building more and more.
But right now, there aren't enough kids actually playing to justify all these amazing new toys and the money spent.
This is similar to what's happening with AI.
Big AI companies are signing giant contracts to buy lots of computer power and build huge buildings for it.
The companies selling them the computer parts and buildings are also investing in the AI companies, creating a loop.
Everyone believes AI will get super popular, but the money being spent on building everything for AI is much more than what people are paying for AI services right now.
This reminds some people of the 'dot-com bubble' long ago, where companies spent a lot on internet stuff, but the real demand didn't catch up, and some of that investment was lost.
OpenAI has entered into massive, multi-year contracts with suppliers like AWS ($38 billion over seven years) and CoreWeave ($22 billion purchase deal).
Circular revenue loops are common, where AI platforms like OpenAI commit billions to infrastructure while suppliers like Nvidia also invest in OpenAI, benefiting from its growth.
These deals involve significant infrastructure build-outs for data centers, requiring substantial energy, and are often financed by OpenAI with vendors retaining ownership or long-term leases.
Total infrastructure spending commitments for OpenAI between 2025-2035 are estimated to exceed $1.15 trillion, a scale not yet supported by current AI application revenue.
The AI sector's speculative investment model, driven by projected dominance and contractual obligations, shares similarities with past speculative cycles like the dot-com era.
- Who
- OpenAI, Nvidia, Amazon Web Services (AWS), Oracle, SoftBank, AMD, CoreWeave, and governments.
- What
- The AI industry, particularly OpenAI, is engaging in speculative growth characterized by circular revenue deals and massive infrastructure commitments that echo the dot-com bubble.
- When
- Current, with contracts extending over several years (e.g., seven years for AWS deal) and spending projected between 2025 and 2035.
- Where
- Global, with specific mentions of AWS infrastructure, national AI infrastructure partnerships, and US data center projects.
- Why
- To secure future demand for AI services by making massive, legally binding infrastructure investments based on projected exponential expansion, creating a self-reinforcing speculative loop.
Speculative AI Growth and Circular Deals
AI Revolution's Real Business Model
Economic Justification for AI Investment
Speculative AI Growth and Circular Deals
Massive infrastructure spending by AI companies like OpenAI is based on projected dominance and exponential expansion, not proven economics, creating a speculative bubble fueled by circular revenue loops and a mismatch between infrastructure investment and current market revenue.
AI Revolution's Real Business Model
While current revenue may not match infrastructure spend, the AI revolution is real, and these contracts are legally binding obligations. The focus on projected expansion is a necessary component of a speculative business model designed for future market validation.
Nature of AI Contracts and Partnerships
Speculative AI Growth and Circular Deals
The numerous billion-dollar, multi-year contracts and equity arrangements between AI platforms and their suppliers (e.g., OpenAI with AWS, Nvidia, Oracle, AMD, CoreWeave) create a tightly woven web of mutual dependencies and circular revenue, where suppliers become stakeholders, blurring lines between investment and infrastructure.
AI Revolution's Real Business Model
These complex arrangements, including sovereign partnerships for national AI infrastructure, are strategic. OpenAI advises governments, funds data centers, and ensures its models run on these systems, positioning itself as a default provider and securing its role in global AI development.
- OpenAI's AWS Deal
- $38 billion over seven years
- OpenAI's Nvidia Relationship
- Supplier of chips, investor in OpenAI affiliates
- OpenAI's Data Center Commitments
- Hundreds of billions for new projects, requiring over 10 gigawatts
- OpenAI's CoreWeave Deal
- $22 billion purchase
- OpenAI's Estimated Infrastructure Spending (2025-2035)
- Over $1.15 trillion
- OpenAI's Projected Revenue (2029)
- $577 billion (vs. $10 billion in 2024)
