Photo by Steve Johnson on Unsplash

First, there was vibe coding. Within a week, we were vibe marketing. Then we started vibe hiring and vibe fundraising. And now, as Brian Chesky (Airbnb’s CEO) pointed out, we are entering the era of “vibe revenue,” where hyperscalers invest in model labs, model labs pre-commit to buying compute from hyperscalers, chip companies invest in labs and clouds that pre-purchase large volumes of chips, startups receive cloud credits that lock them into specific stacks, and everyone publishes record demand numbers.

On the surface, this looks like aggressive investment. The deeper story is a structural pattern that can inflate valuations, concentrate risk, and mask real demand. Vibe revenue is the symptom. Circular financing is the mechanism, and it is becoming a dominant engine behind the AI economy.

Nvidia Earnings

The Nvidia earnings debate on social media last week showcased this pattern. Nvidia reported another record quarter, and the discussion quickly shifted from revenue growth to the structure behind that growth. Some analysts began debating whether the company’s numbers reflect broad, organic demand or a set of circular agreements among hyperscalers, model labs, and chip buyers.

Several verifiable data points fueled the conversation. Nvidia disclosed that accounts receivable reached $33.4 billion, up nearly 90% year-over-year, according to its latest SEC filing. The company also reported $19.8 billion in inventory, up sharply from the prior year. These are official numbers, and they raise real questions about how much AI demand is driven by immediate consumption and how much is tied to pre-orders, subsidies, or strategically financed supply.

Cash flow added another layer. Nvidia generated $14.5 billion in operating cash flow against $19.3 billion in net income. The gap between reported profit and realized cash widened to $4.8 billion. Chip companies with stable enterprise demand often convert more than 90% of profits to cash. Nvidia’s conversion ratio sits closer to 75%. This is not automatically a warning sign, although many investors saw it as evidence of revenue supported by long-dated commitments rather than real-time consumption.

Circular Loops Across the Ecosystem

The debate widened as social posts highlighted examples of circular arrangements across the AI supply chain. According to posts on X, Nvidia invested $2 billion into xAI. Some posts assert that xAI then sought more than $10 billion in financing commitments to buy Nvidia chips.

Some industry watchers also claim that Microsoft’s more than $13 billion investment in OpenAI is tied to OpenAI’s multi-year commitments to Azure for compute. There is a school of analysts who say that Oracle’s cloud credits for OpenAI help fund workloads that return to Oracle Cloud, which itself purchases Nvidia hardware.

This Is How Bubble Fears Emerge

Not all viral claims hold up. Some numbers were pulled from outdated filings. Some charts mixed time periods. Some commentary confused capital expenditure plans with committed purchases. None of this changes the central point. The industry is now confronting real questions about how much AI demand is funded by circular relationships rather than end-customer value.

Hyperscalers want to show rising consumption because Wall Street rewards cloud revenue. Model labs want to show rising compute needs because investors treat it as traction. Chip makers want to show rising GPU demand because each order signals strength in the AI cycle. These incentives produce overlapping signals. Investors struggle to determine how much of the AI boom reflects sustainable enterprise use cases.

There Is a Risk

If you build your AI roadmap on top of signals distorted by circular financing, you may invest ahead of true demand. If you depend on vendors whose business models rely heavily on partner deals, you may face unexpected shifts in pricing, capacity, or support. The supply chain for AI hardware is fragile. A slowdown in lab adoption could ripple through hyperscalers, GPU suppliers, and cloud platforms.

Conventional wisdom says that valuations supported by circular financing can remain stable while capital is cheap and incentives remain aligned. Once conditions change, the circle breaks quickly. Investors begin to ask detailed questions about cash conversion. Regulators ask about concentration risk. Credit agencies ask about counterparty reliability. We’ve seen this movie, and we know how it usually ends.

Real Growth Is Inevitable

The velocity of data is increasing and will always increase. There is no version of the future where there is less data tomorrow than there is today. The demand for AI infrastructure is real. The technology is powerful. The value is significant. The scale and timing of the growth remain uncertain. Circularity hides the uncertainty. It does not eliminate it.

Will the AI boom continue? The bubble risk sits in the structure of the financing, not in the underlying technology. The tech industry has a long record of overestimating short-term adoption and underestimating long-term impact. Right now, “vibe revenue” is a fun headline-grabbing phrase. The hype will fade. The math will not.

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