Boom or Bust Mechanics Used by Large Corps
NVIDIA, Broadcom, Oracle, and AMD are using large equity stakes, loan guarantees, take-or-pay contracts, and warrants to create and fund AI demand thru circular financing.
NVIDIA invested $42B in equity (mainly $30B OpenAI + $10B Anthropic), $250B in customer loan backstops, and a $6.3B take-or-pay deal with CoreWeave (in which it owns ~7%) that forces it to buy unsold capacity through 2032. CoreWeave then buys more NVIDIA chips.
Broadcom backstopped >80% of a $35B tranche tied to Anthropic’s $125B TPU commitment; CEO openly said they are “using financing to create demand.”
Oracle’s $638B backlog (over 50% from OpenAI) and borrowing heavily to build capacity for a customer whose revenue is still far below contracted spend.
AMD Issued ultra-cheap warrants (160M shares each to OpenAI and Meta at $0.01) that vest with chip purchases.
These structures form circular loops where suppliers finance their own future revenue.
Tbh, looking at all this. $BTC and $ETH somehow feel safer considering cryto market is also still not out of bear cycle yet.
Also, my entry on $GRAB feels like achieving enlightenment compared to buying trillion dollar corps in circular financing. They can run up without me but they won’t run too much coz they are alrdy too heavy.
I’m looking at other tickers such as $SE $MELI $PLTR $ASTS and my diversification anchor ETF $SPMO. $ASTS is repeated mention as it is now at a good level below $50. Not for core holding. Good to hold as a satellite position. ASTS alrdy won deals and contracts with multiple governments. It’s a formidable emerging company to challenge Space X’s direct-to-cell telecom.
China economy is looking stronger than US. Not wise to limit ourselves from opportunities coz China is “communist” country. It’s not about democracy or communism. It’s how these governance frameworks are used wisely and what the government brings to the table. We can be prideful and say we aren’t entering Chinese …
Read in full →