Have you ever watched money spin around a table and wondered if anyone’s actually getting ahead? That’s kind of how I’ve been feeling lately about some of these massive deals splashing across the tech headlines. It’s not just the eye-popping numbers that catch my attention—it’s the way the cash seems to boomerang right back to where it started.
A well-known market commentator recently pointed out this trend, dubbing them “Lazy Susan” deals. You know, like that rotating tray at the center of a dim sum table where dishes just keep circling around. One company hands over a huge pile of money to another, and in return, the recipient promises to spend a chunk of it right back on the giver’s products or services. Sounds efficient on paper, but dig a little deeper and it starts to feel a bit… circular.
In my view, these arrangements are becoming more common in the tech world, especially around artificial intelligence. Everyone wants a piece of the AI pie, and sometimes it seems like companies are bending over backward—or forward, depending on how you look at it—to make sure they stay in the game.
The Rise of Circular Tech Investments
Let’s break this down a bit. These deals often involve huge investments into promising AI players. In exchange, the funded company commits to buying hardware, cloud services, or chips from the investor. It’s presented as a win-win: one side gets capital to grow, the other secures a big customer for years to come.
But here’s where it gets interesting. Sometimes the commitment to buy back is so substantial that it almost offsets a good portion of the original investment. You’re left wondering: wouldn’t it have been simpler for the AI company to just purchase what it needs outright? Or is there something else driving these complex structures?
Perhaps the rush to be associated with cutting-edge AI is so intense that companies are willing to structure deals this way just to get a foot in the door. It’s like paying for a VIP pass that also requires you to buy drinks at the bar inside. Sure, you get access, but at what real cost?
A Closer Look at Recent Examples
One deal that’s been making waves involves talks of a major online retailer potentially injecting at least $10 billion into a leading AI developer. In return, the AI firm would commit to purchasing the retailer’s custom AI chips. On the surface, it looks like a strategic partnership boosting both sides.
Yet when you pause and think about it, the circular nature stands out. The money flows out from the retailer, lands in the AI company’s coffers, and then a significant part flows right back through chip orders. It’s clever, no doubt, but it raises questions about genuine demand versus obligated spending.
Another massive commitment that’s drawn attention is a reported plan for an AI player to spend hundreds of billions on infrastructure from a major cloud provider. Again, it’s framed as fueling explosive growth. But with spending on this scale, investors are starting to ask whether all this capital expenditure will translate into proportional returns.
These deals are being celebrated as good news for both parties, but they feel more like money going around in circles.
That sentiment captures it perfectly. Celebration in the short term, but potential concern over long-term sustainability.
Why These Deals Are Raising Eyebrows
The concern isn’t just about one or two transactions. It’s the pattern emerging across the sector. Hyperscalers—the big cloud giants—are pouring enormous sums into AI infrastructure. Data centers, chips, power consumption—all costing billions upon billions.
Meanwhile, AI developers need massive computing power to train and run their models. So the deals make sense on a practical level. But when funding rounds come with strings that direct spending back to the funder, it starts to look like revenue recognition dressed up as investment.
In my experience following markets, circular arrangements can prop up numbers temporarily. They create headlines, boost stock prices in the near term, and keep the growth narrative alive. But if the underlying economics aren’t solid—if the spending is more obligated than organic—then cracks can appear when scrutiny increases.
And scrutiny is definitely increasing. Some investors are beginning to push back, questioning whether all this AI spending will deliver the promised productivity gains fast enough to justify the outlays.
- Growing debt levels at infrastructure providers
- Enormous capital expenditure forecasts
- Questions about actual utilization rates of new data centers
- Potential oversupply of AI-specific hardware
These are the kinds of issues bubbling up. It’s not that AI isn’t transformative—far from it. The potential is enormous. But timing and valuation matter immensely in investing.
Signs of Growing Discipline in the Market
Interestingly, there are early signs that not everyone is jumping on the bandwagon blindly. Reports surfaced recently about a major investment firm backing out of a multibillion-dollar data center funding deal. The reason? Concerns over the recipient’s aggressive spending plans and rising debt load.
I have to say, moves like that feel refreshing. They signal discipline at a time when enthusiasm could easily override caution. When one player steps back and says, “Let’s take a closer look at the numbers,” it can encourage others to do the same.
Perhaps the most intriguing part is how this discipline could ripple through the sector. If more investors and partners start demanding clearer paths to profitability—less reliance on circular commitments—it might force a healthier recalibration.
It’s simply not safe to bet big until someone calls these circular arrangements what they are and pushes for more genuine growth drivers.
That’s the crux of it. Until the market demands more transparency and organic demand, caution seems warranted.
What This Means for Tech Stocks
Tech stocks have enjoyed incredible runs largely on AI optimism. But sustained rallies often need more than promises—they need delivery. If capital spending continues unchecked without corresponding revenue acceleration, valuations can become stretched.
We’ve seen this movie before in tech. Remember the dot-com era? Massive infrastructure buildouts ahead of actual demand led to painful corrections when reality set in. Or more recently, the rush into certain spaces that later consolidated sharply.
The difference today is the scale. We’re talking trillions in potential investment across AI infrastructure. The upside is equally massive if adoption accelerates. But the downside risk grows with every circular deal that prioritizes optics over fundamentals.
For individual stocks tied to these ecosystems—whether chip makers, cloud providers, or AI pure plays—the path forward depends heavily on proving real-world value. Demonstrating that spending translates into efficiency gains, new revenue streams, and sticky customer relationships.
Broader Implications for Investors
So where does this leave everyday investors? First, it’s a reminder that not all growth is created equal. Headline-grabbing deals can move stocks short-term, but sustainable returns come from solid business models.
Second, diversification remains key. Putting all eggs in the AI basket—no matter how promising—carries concentration risk. Balancing with other sectors, asset classes, or strategies can provide stability when any single narrative hits turbulence.
- Monitor capital expenditure trends closely
- Watch for signs of organic versus obligated demand
- Pay attention to debt levels and cash flow generation
- Look for evidence of actual AI productivity gains in earnings reports
- Consider valuation metrics relative to historical norms
These steps can help navigate the current environment. Patience might be the most undervalued asset right now—waiting for clearer evidence before committing heavily.
That said, the long-term story for AI remains compelling. The technology will reshape industries, create efficiencies, and drive growth. The question is timing: are we in the early innings or getting ahead of ourselves with the spending frenzy?
Looking Ahead: Potential Turning Points
Several developments could signal a shift. If major players start scaling back commitments or renegotiating terms, that might indicate peak enthusiasm. Conversely, breakthrough applications driving undeniable revenue could validate the buildout.
Earnings seasons will be crucial. When companies report not just top-line growth but margin expansion from AI investments, confidence could return. Until then, selective investing—focusing on proven executors rather than pure momentum—makes sense.
Regulatory scrutiny could also play a role. As deals grow larger and more interconnected, antitrust or accounting reviews might bring additional transparency.
Whatever the path, one thing feels certain: the tech sector is at an inflection point. The choices made now—whether to continue circular arrangements or demand more disciplined growth—will shape returns for years to come.
In the end, markets reward substance over spin. These Lazy Susan deals have kept the party going, but parties built on circular invitations eventually wind down. The smart move might be watching from the sidelines until the music shifts to a more sustainable beat.
I’ve learned over years of following markets that skepticism isn’t cynicism—it’s survival. When everyone is celebrating the same trade, it’s often time to ask tougher questions. Right now, those questions center on whether all this circling money is creating real value or just dizzying illusions.
Only time will tell. But staying informed, maintaining discipline, and focusing on fundamentals has always been the surest path through uncertain times. The AI revolution is coming—maybe it’s just taking the scenic route.
