Simon Ree: Why the “AI Circular Funding Circus” is a serious macro risk for H1 2026
The Round-Trip Money Loop: $MSFT gives billions in funding to OpenAI. OpenAI then hands the money right back to $MSFT to pay for Azure cloud credits. $NVDA gives billions in “funding” to OpenAI. OpenAI then hands that money right back to $NVDA to buy GPUs…etc…
The Illusion: This creates “round-trip revenue”. It makes MSFT’s cloud business look like it has infinite growth, when a lot of that growth is just MSFT recycling its own cash
The 2026 Danger: OpenAI is now projecting a need for $1.4 trillion in infrastructure. If the killer app that generates trillion dollar revenue doesn’t appear soon, funding dries up, the revenue vanishes and the circus tent collapses on all comapnies
It’s a game of musical chairs where the music is just the same $20B being passed in a circle
The $GOOGL Factor in the AI Circus
Why $GOOGL is the house and everyone else is gambling
The Vertical Moat: Unlike OpenAI and $MSFT, who are “taxed” by $NVDAs 80% gross profit margins, Google uses its own TPUs (Tensor Processing Units)
The Cost Advantage: GOOGL’s TPU v6 (Ironwood) can run AI models at roughly 20% of the cost of the $NVDA chips $MSFT and OpenAI are forced to buy
$GOOGL can lower its AI prices to a level where OpenAI cannot compete without losing billions
And $GOOGL owns the whole stack, from the YouTube and search data to the chips and the consumer distribution ecosystem. They can survive a price war that would bankrupt a company reliant on external hardware
$GOOGL doesn’t need the circular funding circus to survive. They can simply wait for high-cost players to run out of cash
The 2 companies with the largest revenue exposure to OpenAI – $MSFT and $ORCL – have seen their combined market caps lost $1.1 trillion since their peaks
The legal showdown between Musk and OpenAI is scheduled to go to court on 27 April, 2026. If the court rules in favour of Musk, the concentration risk I talked about in my post yesterday could become a full-blown financial crisis for big tech.
I noticed the same thing with Muslim charities a number of years ago. I was researchng spending impproprieties among the Shia (I.e. pro-Iran) charities. NASIMCO is the national body coorindating development of about eight or nine Shia mosques in the country. NASIMCO would transfer money to most of its member associations, and the member associations would transfer money back to NASIMCO. This circular money flow is labeled as “charitable spending” but in reality all it does is to pay salaries for full time staff, using charity donations.
I phoned the CRA charity division, but the person I spoke to said this circular payment was allowed.
Did you speak to a Canadian, a Canadian or a Canadian?
And BTW, AI is grossly over hyped to boot!