Jameel Khan

@jameel

Financial Services | Emerging Tech

Dubai, United Arab Emirates

Joined February 2008

301 Following

168 Followers

19 Posts

jameel retweeted

Cern Basher

@CernBasher

10 months ago

AI Bubble, Bubble, Toil and Trouble? It's all the rage for the media today to proclaim an AI bubble. In particular, Bloomberg with this article (linked in the comments below). Here’s a detailed analysis of where and why Bloomberg’s “OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals” is misleading, wrong, or intellectually sloppy. 1. Misleading framing: “Circular” ≠ “Self-dealing” Bloomberg frames the Nvidia–OpenAI–AMD–Oracle ecosystem as “circular” - implying a kind of self-reinforcing illusion of demand. But in reality, these are vertical supply chain linkages, not circular money laundering loops. Nvidia sells GPUs → OpenAI buys them → OpenAI sells API services → revenue funds more compute. Oracle or CoreWeave buy chips → rent GPU capacity → serve paying enterprise customers. Those customers (Microsoft, JPMorgan, Tesla, etc.) generate actual cash flow. There’s no evidence of fake demand or round-tripping. The capital flows are investment → infrastructure → service → revenue, not investment → self-purchase → inflated asset (which would be circular). Bloomberg collapses this distinction entirely. 2. Fabricated or exaggerated deal sizes (“$100B,” “$300B,” “$1T”) The headline figures are fantasy-level aggregates with no substantiated documentation. Nvidia’s supposed “$100 billion investment in OpenAI” has never been confirmed by SEC filings, Nvidia statements, or OpenAI board disclosures. Bloomberg likely conflated total data-center buildout cost projections (which might reach $100B) with Nvidia’s capital investment. Nvidia does not make direct $100B equity investments in anyone. Its total free cash flow for FY2025 is roughly $65B. The “$300 billion Oracle deal” is similarly a gross contract value across years of capacity, not cash spent. It’s analogous to AWS–OpenAI reserved-instance agreements, not a single transaction. “$1 trillion AI boom” mixes cumulative projected CapEx and market capitalization changes and total contract values - triple counting the same dollars at multiple levels of the stack. Bloomberg’s arithmetic exaggerates by an order of magnitude. 3. Confusing CapEx, OpEx, and equity investment The story continually blurs capital expenditure (data-center build) with equity investment and revenue contracts. Example: “OpenAI struck a $300B deal with Oracle… Oracle, in turn, is spending billions on Nvidia chips, sending money back to Nvidia.” That’s not circular finance - it’s normal industrial layering. Each actor’s spend becomes another’s revenue, just like: Boeing → engine supplier → parts supplier → steel producer. Calling this a “web of circular deals” is like calling the auto industry a Ponzi scheme because GM buys from Bosch who buys from ArcelorMittal. 4. Ignores genuine downstream demand AI infrastructure is not speculative inventory. GPU clusters are immediately rented to paying customers (enterprises using Copilot, Midjourney, Databricks, Tesla FSD labeling, etc.). This differs fundamentally from dot-com “click fraud” or unsold banner ads. By ignoring that end-user demand for AI inference and training is real and monetizable, Bloomberg presents growth as hollow. Cloud GPU utilization rates are above 90% across major providers - hard evidence against the “bubble built on circular deals” thesis. 5. Historical false equivalence (dot-com bubble analogy) “In the late 1990s, circular deals were often centered on advertising and cross-selling...” That analogy fails because: Dot-com firms inflated revenues through barter (A buys ads from B who buys from A). Nvidia/OpenAI deals involve physical assets, depreciation, and cash payments tracked on audited balance sheets. AI hardware has salvage value; data centers are tangible productive assets, not vapor. So the analogy is rhetorically catchy, but economically nonsensical. 6. Ignores profitability asymmetry Bloomberg says: “Never before has so much money been spent… on a technology that remains unproven as an avenue for profit.” False: Nvidia, TSMC, and Microsoft are already generating tens of billions in profit from AI. Nvidia’s gross margin >70%; its $4.5T market cap is underpinned by actual $120B+ annualized revenue. Cloud providers’ AI services (Azure OpenAI, Amazon Bedrock, Google Vertex) are profitable at the infrastructure layer. The software-startup layer (OpenAI, Anthropic, xAI) is cash-burning, but that’s standard frontier CapEx - not evidence of system-wide unprofitability. 7. False causality: “Interconnected = inflated�� The piece implies that because these companies invest in each other, the market is “artificially inflated.” But cross-investment is standard in high-tech ecosystems: TSMC and Apple co-invest in fabs. Samsung supplies Apple OLED panels while competing in phones. Microsoft and OpenAI’s reciprocal investments are structured as revenue-sharing, not circular financing. Such mutual dependencies actually stabilize supply chains and accelerate deployment - the opposite of speculative froth. 8. Omitting technological fundamentals The article never mentions: The AI compute demand curve, doubling every ~6 months. Model size growth, inference latency requirements, or energy scaling constraints. How the “Stargate” buildout corresponds to actual model roadmaps (GPT-5, 6, 7, multimodal training). Without this context, Bloomberg mistakes infrastructure scaling for financial gimmickry. 9. Misunderstanding SPV and structured-finance mechanics “xAI’s $20 billion round… structured via a special purpose vehicle… to buy Nvidia processors.” That’s normal project financing - an SPV buys equipment and leases it back (like aircraft leasing or power-plant project finance). It’s not evidence of a loop; it’s asset-backed lending. Every hyperscaler uses SPVs for depreciation and risk isolation. 10. Cherry-picked pessimistic quotes, omitting balancing facts Uses Morningstar and Harvard academics to raise “bubble” flags. Ignores that every major investment bank (Goldman, JPM, Morgan Stanley) forecasts continued double-digit AI infrastructure growth through 2030. Ignores explicit denials by Nvidia and AMD that investments are conditional on chip purchases (included, but buried). This selection bias amplifies fear without balanced context. 11. Basic math errors about Nvidia’s capacity Claim: “Nvidia has crested the AI wave… with a $4.5 trillion market cap… investing $100B in OpenAI…” If Nvidia were investing $100B cash in OpenAI, it would consume nearly two years of total free cash flow and trigger massive SEC disclosures - none exist. Bloomberg’s own “PitchBook data” later cites $2B-level equity stakes - a 50× discrepancy. That’s not nuance; that’s factually incorrect reporting. 12. Ignores national-strategic context Bloomberg frames the U.S. government’s laissez-faire stance as negligence. But: The CHIPS Act, DoD compute reserves, and DOE grid partnerships are deliberate national-scale moves to ensure U.S. AI dominance. “Circular” private investments are part of a coordinated industrial policy (similar to defense procurement cycles), not random bubble behavior. 13. Misrepresents OpenAI’s burn and funding “OpenAI… burning through cash and doesn’t expect to be cash-flow positive until near the end of the decade.” That’s a paraphrase of older comments (2023–2024). Recent reports show OpenAI profitable on a gross-margin basis from API and enterprise deals; the losses are from expansion CapEx. Bloomberg conflates operating loss (due to investment) with negative unit economics (which are not true). 14. Equating hype with fraud The rhetorical climax - “Altman could crash the global economy” - is sensationalist. Even a total OpenAI collapse would shave <0.1% off global GDP. AI CapEx is <2% of U.S. corporate investment - large, but not systemic. There’s no leverage or contagion mechanism akin to subprime CDOs or dot-com debt. So the “systemic bubble risk” narrative is economically false. Bottom line Why right an accurate article when a sensational one gets more attention? The truth is self-evident.

CernBasher's tweet photo. AI Bubble, Bubble, Toil and Trouble?

It's all the rage for the media today to proclaim an AI bubble.

In particular, Bloomberg with this article (linked in the comments below).

Here’s a detailed analysis of where and why Bloomberg’s “OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals” is misleading, wrong, or intellectually sloppy.

1. Misleading framing: “Circular” ≠ “Self-dealing”

Bloomberg frames the Nvidia–OpenAI–AMD–Oracle ecosystem as “circular” - implying a kind of self-reinforcing illusion of demand.

But in reality, these are vertical supply chain linkages, not circular money laundering loops.

Nvidia sells GPUs → OpenAI buys them → OpenAI sells API services → revenue funds more compute.

Oracle or CoreWeave buy chips → rent GPU capacity → serve paying enterprise customers.

Those customers (Microsoft, JPMorgan, Tesla, etc.) generate actual cash flow.

There’s no evidence of fake demand or round-tripping.

The capital flows are investment → infrastructure → service → revenue, not investment → self-purchase → inflated asset (which would be circular).

Bloomberg collapses this distinction entirely.

2. Fabricated or exaggerated deal sizes (“$100B,” “$300B,” “$1T”)

The headline figures are fantasy-level aggregates with no substantiated documentation.

Nvidia’s supposed “$100 billion investment in OpenAI” has never been confirmed by SEC filings, Nvidia statements, or OpenAI board disclosures.
Bloomberg likely conflated total data-center buildout cost projections (which might reach $100B) with Nvidia’s capital investment.

Nvidia does not make direct $100B equity investments in anyone. Its total free cash flow for FY2025 is roughly $65B.

The “$300 billion Oracle deal” is similarly a gross contract value across years of capacity, not cash spent. It’s analogous to AWS–OpenAI reserved-instance agreements, not a single transaction.

“$1 trillion AI boom” mixes cumulative projected CapEx and market capitalization changes and total contract values - triple counting the same dollars at multiple levels of the stack.

Bloomberg’s arithmetic exaggerates by an order of magnitude.

3. Confusing CapEx, OpEx, and equity investment

The story continually blurs capital expenditure (data-center build) with equity investment and revenue contracts.

Example:

“OpenAI struck a $300B deal with Oracle… Oracle, in turn, is spending billions on Nvidia chips, sending money back to Nvidia.”

That’s not circular finance - it’s normal industrial layering.

Each actor’s spend becomes another’s revenue, just like:

Boeing → engine supplier → parts supplier → steel producer.

Calling this a “web of circular deals” is like calling the auto industry a Ponzi scheme because GM buys from Bosch who buys from ArcelorMittal.

4. Ignores genuine downstream demand

AI infrastructure is not speculative inventory.

GPU clusters are immediately rented to paying customers (enterprises using Copilot, Midjourney, Databricks, Tesla FSD labeling, etc.).

This differs fundamentally from dot-com “click fraud” or unsold banner ads.

By ignoring that end-user demand for AI inference and training is real and monetizable, Bloomberg presents growth as hollow.

Cloud GPU utilization rates are above 90% across major providers - hard evidence against the “bubble built on circular deals” thesis.

5. Historical false equivalence (dot-com bubble analogy)

“In the late 1990s, circular deals were often centered on advertising and cross-selling...”

That analogy fails because:

Dot-com firms inflated revenues through barter (A buys ads from B who buys from A).

Nvidia/OpenAI deals involve physical assets, depreciation, and cash payments tracked on audited balance sheets.

AI hardware has salvage value; data centers are tangible productive assets, not vapor.

So the analogy is rhetorically catchy, but economically nonsensical.

6. Ignores profitability asymmetry

Bloomberg says:

“Never before has so much money been spent… on a technology that remains unproven as an avenue for profit.”

False: Nvidia, TSMC, and Microsoft are already generating tens of billions in profit from AI.

Nvidia’s gross margin >70%; its $4.5T market cap is underpinned by actual $120B+ annualized revenue.

Cloud providers’ AI services (Azure OpenAI, Amazon Bedrock, Google Vertex) are profitable at the infrastructure layer.

The software-startup layer (OpenAI, Anthropic, xAI) is cash-burning, but that’s standard frontier CapEx - not evidence of system-wide unprofitability.

7. False causality: “Interconnected = inflated��

The piece implies that because these companies invest in each other, the market is “artificially inflated.”
But cross-investment is standard in high-tech ecosystems:

TSMC and Apple co-invest in fabs.

Samsung supplies Apple OLED panels while competing in phones.

Microsoft and OpenAI’s reciprocal investments are structured as revenue-sharing, not circular financing.

Such mutual dependencies actually stabilize supply chains and accelerate deployment - the opposite of speculative froth.

8. Omitting technological fundamentals

The article never mentions:

The AI compute demand curve, doubling every ~6 months.

Model size growth, inference latency requirements, or energy scaling constraints.

How the “Stargate” buildout corresponds to actual model roadmaps (GPT-5, 6, 7, multimodal training).

Without this context, Bloomberg mistakes infrastructure scaling for financial gimmickry.

9. Misunderstanding SPV and structured-finance mechanics

“xAI’s $20 billion round… structured via a special purpose vehicle… to buy Nvidia processors.”

That’s normal project financing - an SPV buys equipment and leases it back (like aircraft leasing or power-plant project finance).

It’s not evidence of a loop; it’s asset-backed lending.
Every hyperscaler uses SPVs for depreciation and risk isolation.

10. Cherry-picked pessimistic quotes, omitting balancing facts

Uses Morningstar and Harvard academics to raise “bubble” flags.

Ignores that every major investment bank (Goldman, JPM, Morgan Stanley) forecasts continued double-digit AI infrastructure growth through 2030.

Ignores explicit denials by Nvidia and AMD that investments are conditional on chip purchases (included, but buried).

This selection bias amplifies fear without balanced context.

11. Basic math errors about Nvidia’s capacity

Claim: “Nvidia has crested the AI wave… with a $4.5 trillion market cap… investing $100B in OpenAI…”

If Nvidia were investing $100B cash in OpenAI, it would consume nearly two years of total free cash flow and trigger massive SEC disclosures - none exist.

Bloomberg’s own “PitchBook data” later cites $2B-level equity stakes - a 50× discrepancy.

That’s not nuance; that’s factually incorrect reporting.

12. Ignores national-strategic context

Bloomberg frames the U.S. government’s laissez-faire stance as negligence.

But: The CHIPS Act, DoD compute reserves, and DOE grid partnerships are deliberate national-scale moves to ensure U.S. AI dominance.

“Circular” private investments are part of a coordinated industrial policy (similar to defense procurement cycles), not random bubble behavior.

13. Misrepresents OpenAI’s burn and funding

“OpenAI… burning through cash and doesn’t expect to be cash-flow positive until near the end of the decade.”

That’s a paraphrase of older comments (2023–2024).

Recent reports show OpenAI profitable on a gross-margin basis from API and enterprise deals; the losses are from expansion CapEx.

Bloomberg conflates operating loss (due to investment) with negative unit economics (which are not true).

14. Equating hype with fraud

The rhetorical climax - “Altman could crash the global economy” - is sensationalist.

Even a total OpenAI collapse would shave <0.1% off global GDP.

AI CapEx is <2% of U.S. corporate investment - large, but not systemic.

There’s no leverage or contagion mechanism akin to subprime CDOs or dot-com debt.

So the “systemic bubble risk” narrative is economically false.

Bottom line

Why right an accurate article when a sensational one gets more attention?

The truth is self-evident.

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jameel retweeted

ᴅᴇ-ᴛʀɪɢɢᴇʀ @starrTRIGGER

about 1 year ago

I often get asked: PoW vs. PoS what’s the real trade-off? #PoW offers robust security but guzzles energy. #PoS is eco-friendly and scalable but can favor the wealthy. Which do you think suits enterprise blockchains best? #Blockchain #Consensus

327

Jameel Khan @jameel

about 4 years ago

@borneoecotours Hi - struggling to get in touch with Hannah or Hanif

jameel retweeted

GarageXYZ @GarageXYZ

over 4 years ago

Genesis500 reveal begins in 10 minutes. To celebrate, we're shipping HQ prints of @eanofoto's work to 10 holders. 🏁Like + RT this post 🏁Tweet your Genesis500 and tag @GarageXYZ We'll choose our 10 holders in 48 hours.

GarageXYZ's tweet photo. Genesis500 reveal begins in 10 minutes.

To celebrate, we're shipping HQ prints of @eanofoto's work to 10 holders.

🏁Like + RT this post
🏁Tweet your Genesis500 and tag @GarageXYZ

We'll choose our 10 holders in 48 hours. https://t.co/tEF727XgPq

105

Who to follow

Pablo Quiroz F

@pquirozf22

Ser normal nunca !!! 🪐✨☄️ tracking Elon musk and Tesla news. Love crypto and Chile . Also reposting scientific and health facts.

RUSTY💯💯🫴🫴🚧🚧

@FelixKaden

rapping

kashtkar Dost Foundation

@Munirshaheen1

work on Climate change ' Agriculture Marketing ' Livestock ' Transfer of Technology ' Organic Food ۔

Jameel Khan @jameel

over 4 years ago

@OhSineady So sorry to read this - may he be at peace and may you have the strength to bear this grief

Jameel Khan @jameel

almost 5 years ago

Join Argent's L2 waitlist & $270k crypto sweepstakes https://t.co/fadvagOu9Q

Jameel Khan @jameel

over 5 years ago

@jonsnowC4 You've been a beacon of courage, truth and humanity Jon - you'll be missed. All the very best to you and your family.

Jameel Khan @jameel

over 5 years ago

@FlyteSocks really disappointed by your customer service - order F2218S sent way oversized socks, I write back and two weeks later still no word of a reply or acknowledgement!

jameel retweeted

Brian Cox

@ProfBrianCox

about 7 years ago

The distorted perspective of the professional party politician. Reminds me of that old joke about a headline in The Parrot Times. ‘Titanic Sinks! No Parrots Injured’.

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