Around 25 percent of Nvidia’s sales next year will come from AI labs it funds, prompting debates over circular dealmaking.
Giant computer chip maker Nvidia has built a massive business powering modern artificial intelligence, but a big part of its money flow is now raising serious questions.
About 25% of all the money Nvidia expects to make next year will come directly from artificial intelligence research labs that Nvidia itself is helping to fund.
Imagine a store owner giving money to local shoppers, only for those shoppers to walk right back inside and buy goods from that same store.
This loop of cash is what financial experts call circular financing, and it has started a huge debate across the technology world.
This financial pattern became clear in August 2026 as analysts examined major investment deals made across North America and global technology hubs.
Nvidia produces the powerful computer chips that companies need to build smart tools like chatbots and image generators.
Because building these artificial intelligence tools costs billions of dollars, young tech companies often struggle to afford the necessary hardware.
To help them out, Nvidia has been investing huge sums of money directly into startup labs, data centers, and cloud providers. The funded companies then use that exact money to purchase Nvidia’s expensive computer chips.
Many market watchers worry that this setup makes the artificial intelligence industry look much bigger and richer than it actually is.
If Nvidia gives a company money to buy its products, sales numbers go up on paper, but actual outside demand might be much lower.
Critics warn that if one of these funded startups fails to make real profits, the entire chain could collapse like a house of cards, hurting the overall technology economy.
Nvidia leaders strongly disagree with those worries and insist these deals are completely safe and smart for their future growth.
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Responding directly to critics during an official company report, Nvidia Chief Financial Officer Colette Kress stated that “we recognize the scale of this support, and we know some will call this circular financing. We see it differently”.
She explained that these cash investments help build a strong foundation for new technology while bringing great long term rewards.
Addressing fears that Nvidia could lose massive amounts of money if these AI labs fail, Colette Kress also stated that “the Nvidia compute platform is fungible and durable, and can be redeployed to support other customers”.
This means that even if a funded customer goes out of business, the physical computer chips remain highly valuable and can easily be rented or sold to somebody else.
Chief Executive Officer Jensen Huang has also defended their strategy, declaring in public statements that “the idea that it is circular is, it’s ridiculous”. He added that “in AI, compute is revenue” to show that computer power directly drives business value.
Even with those reassuring words, money experts are keeping a close eye on Nvidia’s continuous investments. Time will tell whether funding its own customers creates a strong tech future or simply builds a risky loop of artificial sales.
About the Author
Jennifer Sakmufuwo Baba is a tech analyst, senior staff, and writer covering artificial intelligence, cybersecurity , and emerging technologies at TechRegard. Based in Nigeria, she's passionate about translating complex tech developments into compelling, accessible stories for diverse audiences. Her work focuses on how technology shapes innovation across Africa and globally.
