A Guide to the Circular Deals Underpinning the AI Boom

Overview of Circular Deals in AI

The AI boom has attracted massive investments from both debt and equity markets, creating a web of interlinked financial arrangements across multiple industries. These “circular deals” involve companies relying on one another for funding, often leading to a complex and interconnected ecosystem.

Risks of Interlinked Investments

Such circular arrangements raise significant risks, including the potential for cascading losses if AI fails to meet its performance expectations. The interdependence between firms can amplify financial vulnerabilities, as a downturn in one sector may quickly ripple through others.

Examples and Industry Context

• Companies are increasingly turning to each other for funding, especially in the AI sector, where capital requirements are extremely high.
• These deals have become common in AI, with a small number of firms forming partnerships to share costs and resources.
• Experts such as Capt. (Dr.) SG Naravane highlight that such deals may create skewed incentives, leading to poor decision-making and magnified losses.

Expert Perspectives

While some analysts, like Owen Lamont, argue that circular deals are not alarming, others remain cautious about the potential for financial bubbles and systemic risks in the AI economy.

來源：https://www.bloomberg.com/graphics/2026-ai-circular-deals/