Compute as Currency: AI Circular Financing Echoes Dot-Com Bubble Death Spiral

Last week at a closed-door pitch in Silicon Valley, the CEO of an AI startup confidently showcased their deep integration with a certain cloud provider to investors: discounted compute costs, priority supply, and even a promise from the cloud provider to lead the next funding round. Several old friends from dollar funds exchanged glances from the audience—the scene felt all too familiar. Twenty years ago, Cisco and Lucent were doing the same thing, pumping money into .com companies and then using those orders to polish their own financial reports. Jim Cramer's warning isn't alarmist; he pointed out the most fragile link in this AI feast: when financing and revenue become two sides of the same coin, valuation loses its anchor.