What is circular financing in AI?

A chip supplier lends to or invests in an AI lab, and the lab spends that money on the supplier's chips. The supplier books the sale as revenue. The revenue is real, but it is only as good as the lab's ability to keep raising money. Examples in 2026 include Broadcom's agreement to lend Anthropic up to $42 billion in convertible notes, and Nvidia's equity stakes in private AI companies, which stood at $47.9 billion on 26 July 2026.

How much has Nvidia invested in private AI companies?

Nvidia's non-marketable equity securities, which are mostly stakes in private companies, were $47.9 billion at 26 July 2026, up from $3.8 billion a year earlier. In the July quarter alone Nvidia added $13.1 billion of new stakes and moved $12.3 billion to its marketable securities line as holdings went public. The figure is a floor on its exposure: it leaves out stakes that are now public and commitments not yet funded. The source is Note 6 of Nvidia's 10-Q for the quarter ended 26 July 2026.

Did Broadcom lend Anthropic $42 billion?

Anthropic's IPO filing, as reported by Reuters on 1 October 2026, says Broadcom agreed to provide up to $42 billion of financing as convertible notes. That could cover about a third of Anthropic's $125.2 billion five-year commitment to lease TPU computing capacity, the AI chips Google designs with Broadcom. Anthropic said it does not expect any notes to be sold before its IPO. Broadcom's free cash flow was about $39.4 billion over the last twelve months, so the full facility equals roughly 13 months of it.

Is AI circular financing a sign of a bubble?

It is a late-cycle pattern worth tracking, but on 12 October 2026 the markets that would show stress first were calm. High-yield bonds (HYG) were flat on the week, the VIX was 15.2 and the S&P 500 was 0.1% below its one-year high, while semiconductor stocks had fallen 7.6% in five days. The signals that would turn it into a problem are measurable: Nvidia taking longer to collect from customers, private stakes growing faster than revenue, hyperscalers cutting capex, or a weak Anthropic IPO.

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Fundamentals

AI Circular Financing: What Nvidia's and Broadcom's Filings Show

13 October 2026 · Updated 13 October 2026 · 8 min read

Chipmakers are now some of the biggest financiers of the AI labs that buy their chips. Nvidia's stakes in private companies went from $3.8 billion to $47.9 billion in a year, and Broadcom has agreed to lend Anthropic up to $42 billion. That money comes back to the chipmakers as revenue, so their sales now depend partly on the labs' ability to keep raising capital.

On 12 October the markets that would show stress first were still calm. Below are the numbers from the filings and the signals that would change that read. The last section is our AI-assisted view. It is neither a forecast nor advice.

What set it off

On 12 October Broadcom CEO Hock Tan spoke on a panel at DBS's Asia Future Forward conference in Singapore. Press accounts carry three points from it:

Capital may now be the biggest constraint on AI, more than wafers, memory or power. "[What] I think might be the biggest constraint is capital." He also said Broadcom is getting past the wafer and memory shortages, which is good news for a supplier.
Many AI investors behave like gamblers. They set "very extreme expectations", he said, and find "it's almost like they are in a casino". The reports place this mainly at the money going into the frontier model labs, not at buyers of listed stocks.
Companies are wasting their AI budgets. "Your parents give you $10 of tokens, you finish it in 10 minutes and you haven't learned anything. That's what's happening in enterprises today."

No transcript or recording of the panel is public, so all three come from press reports. Intel CEO Lip-Bu Tan made a similar point about the cost of capital and whether AI spending will earn a return.

Broadcom shares fell 1.9% that day, Nvidia 1.3% and the Nasdaq 100 0.7%. A real warning about demand from Broadcom's CEO would have moved them far more. The token remark also doubles as Broadcom's sales pitch: custom chips that cost less per unit of work than general-purpose GPUs.

What gives the remarks weight is something on paper. Two weeks earlier Anthropic's IPO filing showed Broadcom financing its chip purchases. The CEO calling the labs' backers gamblers is himself one of their larger backers, and that position is why his view on capital deserves attention.

How the loop works

A supplier lends to an AI lab, or buys a stake in it.
The lab uses the money to buy or lease the supplier's chips.
The supplier records the sale as revenue.
The lab raises its next round, or goes public, and the cycle repeats.

Vendor financing is legal and common. It becomes a risk when a large share of revenue rests on customers whose spending depends on outside money that could dry up.

This is different from hyperscaler capex. Alphabet, Amazon, Meta and Microsoft pay for their data centres mainly out of their own operating cash flow. The circular part runs through the labs (OpenAI, Anthropic, xAI) and the GPU cloud providers, which burn cash and lean on suppliers and private credit.

Nvidia: the hub

Nvidia's own filings show the loop. From its 10-Qs:

Quarter end	Revenue	Receivables	Days to collect	Private-company stakes
Apr 2024	$26.0bn	$12.4bn	43	$1.5bn
Oct 2024	$35.1bn	$17.7bn	46	$2.2bn
Apr 2025	$44.1bn	$22.1bn	46	$3.2bn
Jul 2025	$46.7bn	$27.8bn	54	$3.8bn
Oct 2025	$57.0bn	$33.4bn	53	$8.2bn
Apr 2026	$81.6bn	$40.7bn	45	$42.3bn
Jul 2026	$96.2bn	$63.1bn	60	$47.9bn

"Days to collect" is our arithmetic: receivables divided by quarterly revenue, times 91 days. January quarters are missing because Nvidia reports them only in its annual 10-K.

Two things stand out.

Private stakes went from $3.8 billion to $47.9 billion in a year. In the July quarter alone Nvidia added $13.1 billion of new stakes and booked $4.9 billion of unrealised gains. It also moved $12.3 billion out of this line as holdings went public. So the $47.9 billion is a floor on Nvidia's exposure: it leaves out stakes that are now listed and commitments not yet funded.

Receivables grew faster than revenue in the latest quarter. They rose $22.4 billion while revenue rose $14.6 billion, and days to collect went from 45 to 60, the highest in the table. One quarter can be timing, with shipments landing late in the period. A second reading is needed before calling it a trend.

The biggest headline deal has shrunk. In September 2025 Nvidia and OpenAI signed a letter of intent for Nvidia to invest up to $100 billion. By March 2026 Jensen Huang said investing the full amount was "probably not in the cards", and Nvidia has instead moved in smaller steps.

Not all of Nvidia's exposure sits on the balance sheet. Its 8-K of 17 August 2026 discloses a $105 billion residual-value guaranty that backs the lessor of OpenAI's Ohio data centre if OpenAI defaults on the lease. OpenAI has agreed to repay Nvidia for anything it pays out, but OpenAI can honour that promise only in the case where the guaranty is not needed. We covered that arrangement in what actually breaks in the AI value chain.

Broadcom: the lender

Broadcom's agreement with Anthropic is a different shape. According to Anthropic's IPO filing, as reported by Reuters on 1 October:

Up to $42 billion of convertible notes, which could turn into Anthropic shares.
That could cover about a third of Anthropic's $125.2 billion five-year commitment to lease TPU capacity, chips Google designs with Broadcom.
Anthropic does not expect any notes to be sold before its IPO.
The filing flags potential conflicts of interest in its access to computing power.

Separately, the AI XPV platform Broadcom set up with Apollo and Blackstone closed a $35 billion first tranche in June for Anthropic's 1-gigawatt deployment. Broadcom says outside partners underwrite those assets.

Broadcom's free cash flow was about $39.4 billion over the last twelve months, so the full facility equals roughly 13 months of it.

How worried are investors?

Not much yet. Prices to the 12 October close:

	5 days	From 1-year high	vs 200-day average
S&P 500 (SPY)	+0.4%	-0.1%	+8.0%
Nasdaq 100 (QQQ)	-1.3%	-1.8%	+11.1%
Semiconductors (SOXX)	-7.6%	-16.8%	+17.7%
High-yield bonds (HYG)	+0.4%	-2.3%	-0.8%
VIX	15.2	about half its 1-year high

High-yield bonds matter most here. If the financing loop were cracking, lenders would feel it before stockholders, and high-yield credit would weaken first. It has not. What happened instead was a sector sell-off: SK hynix, Seagate, Sandisk and Western Digital fell 12 to 17% in the week to 12 October (Micron 7%), and most of that drop came before Tan spoke. Seagate, Sandisk and Micron are still 13 to 40% above their 200-day averages after a long run, so the sell-off can go further without anything systemic breaking.

Our read

This section is an AI-assisted view, not financial advice.

The loop is real and growing. Market stress has not appeared yet. A supplier financing its customers is a late-cycle pattern, and Nvidia's private stakes grew more than twelvefold in a year. Against that, the companies doing most of the AI spending pay for it out of cash flow, credit markets are calm, and Nvidia's revenue is still growing much faster than its stakes are being written down.

Revenue backed by vendor financing is worth less than revenue paid in cash. It is worth the same only if the lab raises its next round. That is why Anthropic's IPO matters to more than Anthropic. If it prices well, public investors take over the funding and the supplier loans look sensible. If it struggles, the suppliers keep funding the loop themselves.

What would change this view:

Capex cuts. Alphabet and Meta report on 28 October and Amazon on 29 October. Flat or lower capex guidance would undercut the self-funded half of the buildout.
Nvidia's next 10-Q (late November) showing days to collect above 60, or private stakes again growing faster than revenue.
A weak Anthropic IPO, which would leave the supplier loans to be funded privately.
High-yield credit breaking down, or the VIX moving above about 25 while chip stocks keep falling. That would mean the selling has spread beyond one sector.

If you sell puts on AI hardware names, a put sold now and expiring after 28 October will be exposed to those capex results. The levelbox screener updates each name's trend and premium daily. Our posts on the AI buildout's move from capex to ROI and what actually breaks in the AI value chain cover the same names from the demand side.

Method

Nvidia figures: Nvidia 10-Q filings with the SEC, through the quarter ended 26 July 2026, read from SEC XBRL data. "Private-company stakes" is the non-marketable equity securities line. The July-quarter additions, gains and reclassification are from the roll-forward table in Note 6. "Days to collect" is our arithmetic.
Nvidia–OpenAI: PYMNTS (September 2025) on the letter of intent; Bloomberg Law (4 March 2026) on Jensen Huang's comments.
Nvidia guaranty: Nvidia Form 8-K filed with the SEC, 17 August 2026.
Broadcom–Anthropic: Reuters via The Star (1 October 2026), citing Anthropic's IPO filing; Yahoo Finance (October 2026) for Broadcom's trailing free cash flow and the XPV platform. The 13-month figure is our arithmetic.
Hock Tan and Lip-Bu Tan: CNBC, Yahoo Finance and Tradingpedia (12 October 2026), Futu News (13 October 2026). We could not find a transcript or recording of the panel.
Prices: daily closes to 12 October 2026, our own calculation.
Earnings dates: company announcements as carried in our earnings calendar.

This article is analytical and educational and is not financial advice. It names companies as worked examples only. Figures are a point-in-time snapshot and can contain errors. This article was generated with AI assistance. If you spot a mistake, tell us.

Common questions

What is circular financing in AI?: A chip supplier lends to or invests in an AI lab, and the lab spends that money on the supplier's chips. The supplier books the sale as revenue. The revenue is real, but it is only as good as the lab's ability to keep raising money. Examples in 2026 include Broadcom's agreement to lend Anthropic up to $42 billion in convertible notes, and Nvidia's equity stakes in private AI companies, which stood at $47.9 billion on 26 July 2026.
How much has Nvidia invested in private AI companies?: Nvidia's non-marketable equity securities, which are mostly stakes in private companies, were $47.9 billion at 26 July 2026, up from $3.8 billion a year earlier. In the July quarter alone Nvidia added $13.1 billion of new stakes and moved $12.3 billion to its marketable securities line as holdings went public. The figure is a floor on its exposure: it leaves out stakes that are now public and commitments not yet funded. The source is Note 6 of Nvidia's 10-Q for the quarter ended 26 July 2026.
Did Broadcom lend Anthropic $42 billion?: Anthropic's IPO filing, as reported by Reuters on 1 October 2026, says Broadcom agreed to provide up to $42 billion of financing as convertible notes. That could cover about a third of Anthropic's $125.2 billion five-year commitment to lease TPU computing capacity, the AI chips Google designs with Broadcom. Anthropic said it does not expect any notes to be sold before its IPO. Broadcom's free cash flow was about $39.4 billion over the last twelve months, so the full facility equals roughly 13 months of it.
Is AI circular financing a sign of a bubble?: It is a late-cycle pattern worth tracking, but on 12 October 2026 the markets that would show stress first were calm. High-yield bonds (HYG) were flat on the week, the VIX was 15.2 and the S&P 500 was 0.1% below its one-year high, while semiconductor stocks had fallen 7.6% in five days. The signals that would turn it into a problem are measurable: Nvidia taking longer to collect from customers, private stakes growing faster than revenue, hyperscalers cutting capex, or a weak Anthropic IPO.