Nvidia reckons new $500 billion investment should allay fears AI companies are just funded by the same pot of cash moving around in one big circle. Reassured yet?

This week, Nvidia announced it will be receiving “over $500 billion of third-party capital” from banks and investment companies. And now, in a blog post explaining how ‘AI factory’ compute is “becoming an investable asset class”, Nvidia has answered the question, “Is this circular financing?”

The company says: “This initiative is designed to address that concern. We are bringing independent, long-term institutional capital into the AI infrastructure market.

“The demand is real: it comes from frontier AI labs, AI-native startups, enterprises, cloud providers and countries building AI services. The capital providers independently underwrite each project — including the customer, demand, utilization, cash flow and residual value. NVIDIA provides the platform; the investors make independent financing decisions.

“This is the beginning of an open capital market for AI infrastructure.”

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BlackRock CEO Larry Fink reportedly said, “We need to raise this money as fast as possible… This is going to be creating a huge amount of jobs.”

Let me get the positivity out of the way with first: Yes, it’s good that Nvidia is addressing the concern that the AI market finances itself circularly, by having AI companies fund other AI companies and vice versa with the same pot of money going around and around. Alright, that’s the positive sorted—on to the negative.

First, of course Nvidia can say so now, after months of circular financing has already occurred. Now that it’s opening up to widescale financing beyond the AI industry itself, it must be a lot easier for it to talk about. But where was this recognition six months ago?

Taipei, Taiwan- July 25, 2022: The office building of Nvidia Corporation in Neihu Technology Park, Taipei, Taiwan. It is an American multinational technology company.

(Image credit: BING-JHEN HONG via Getty Images)

Second, in the world of bigwig investment, it’s hard to ever fully distance yourself from circularity. BlackRock, for instance, alongside Microsoft and Nvidia, has previously bought almost 80 AI facilities in a $40 billion deal. So I doubt funds already wrapped up in AI investments will balk too much at getting Nvidia a bunch of money for more AI building, as some of that will presumably trickle back in their direction, too.

Third, it’s kind of unsurprising that big hedge funds like BlackRock would want to keep the AI hype going given the economy itself is arguably now somewhat dependent on it. Most economic analysis seems to agree that the AI industry is indeed a (giant) bubble, and that when it pops it could spell very bad news for the economy in general.

This photograph shows the logo of Microsoft displayed on the facade of the company France headquarters in Issy-les-Moulineaux, on the outskirts of Paris, on April 24, 2026. (Photo by Martin LELIEVRE / AFP via Getty Images)

(Image credit: Martin LELIEVRE / AFP via Getty Images)

To wit, New York Times financial columnist Andrew Ross Sorkin says of this $500 billion partnership: “Mark Monday on your calendar. It’s a date we may look back on years from now as either the inflection point in the AI boom—or the moment it got so leveraged that a crisis began to form.”

Finally, while it might be good that Nvidia has acknowledged concerns about the AI industry’s financial circularity, it’s far from clear that a $500 billion investment from Wall Street adds more solidity to the market. We have to remember that these investments are made on the promise of AI actually returning on investment, something we’ve seen little evidence of so far.

To my eyes, it looks a lot like tech CEOs gritting their teeth and crossing their fingers that the bubble doesn’t pop before AI makes some miraculous, superintelligent breakthrough that grants an exponential ROI. And if that’s the case, this $500 billion investment might mean more of an “open capital market” for AI, but it could still just be buying time before the inevitable *pop*.