According to Fortune, Microsoft, Nvidia, and Anthropic announced strategic partnerships on Tuesday that Microsoft CEO Satya Nadella described as “We are increasingly going to be customers of each other.” Nvidia just posted a 62% surge in revenue growth in Q3 earnings, blowing past targets, while AMD, Cisco, and Saudi-backed HUMAIN formed a joint venture to build up to 1 gigawatt of AI infrastructure in Saudi Arabia. Meanwhile, a new report shows that 60% of U.S. adults have now used generative AI since ChatGPT’s launch less than three years ago, making it the fastest-adopted technology in history. Daily workplace AI usage surged from 21% to 31% between March and July 2025, with workers reporting 15% productivity boosts.
The circular AI economy is here
Here’s the thing about these partnerships: they’re not just strategic alliances. They’re full-blown circular ecosystems where everyone plays multiple roles simultaneously. Microsoft invests in Anthropic, Anthropic runs on Azure, Anthropic buys Nvidia chips, and Nvidia invests in Anthropic. It’s like a corporate version of “Ring Around the Rosy” with billions of dollars at stake.
Nvidia has basically perfected this model over the past three years. The company invests in its own customers – like that potential $100 billion commitment to OpenAI – who then commit to buying massive amounts of Nvidia chips. It’s a brilliant way to lock in demand while competitors like Amazon and Google try to build their own AI chips. But as one analyst noted, it’s “very murky” whether Nvidia is investing or basically subsidizing its own demand.
Everyone’s joining the circle
This isn’t just a Nvidia phenomenon. Anthropic has the same arrangement with Amazon – Amazon invests, Anthropic gets AWS infrastructure and custom chips. OpenAI partners with AMD for GPUs while getting an option to buy up to 10% of the company. The Saudi joint venture requires the venture to exclusively buy AMD GPUs and Cisco networking gear from the same companies that invested in it.
So what’s the problem? Well, it creates incredibly concentrated power among a tiny group of players. These companies are taking on massive debt before proving sustainable business models. The market signals get completely blurred – we can’t tell what’s real demand versus artificially created through these circular arrangements. And honestly, what happens when one player stumbles? They might all fall down together.
Adoption vs sustainability
The irony is that while these circular partnerships create potential instability, AI adoption is absolutely exploding. We’re talking about the fastest technology adoption in human history – 60% of American adults in under three years. Workplace integration is accelerating even faster, with 40% of workers now using AI tools.
But here’s my question: can the underlying business models support this breakneck growth? Nvidia claims it has “visibility to a half a trillion dollars” in revenue through 2026. That would make it one of America’s biggest companies. But if that visibility comes from these circular arrangements rather than genuine market demand, we might be building a house of cards.
Regulatory shifts complicate things
Meanwhile, the regulatory landscape is shifting dramatically. Trump’s draft executive order aims to override state AI laws, specifically targeting California’s SB 53 as “complex and burdensome.” Europe is scaling back its GDPR and AI Act provisions. And Meta’s chief AI scientist Yann LeCun is leaving to start his own startup, which Meta will apparently partner with.
Basically, we’re seeing massive adoption, dizzying corporate circularity, and regulatory uncertainty all at once. As Fortune’s Sharon Goldman notes, this “loopification” might require some Dramamine. The AI revolution is real – the adoption numbers prove that. But whether the current business models can sustain it? That’s the billion-dollar question nobody can answer yet.
