The past two weeks have given us one of the more surreal spectacles in the short history of AI deals.
Nvidia, AMD, OpenAI and Oracle all lined up to throw billions of dollars at each other – almost in perfect synchrony.
Here’s how it works (I think)…
Nvidia and AMD supply the chips that make AI possible. OpenAI pays Oracle for cloud and compute capacity to train and deploy its models. Oracle then uses that cash to buy more Nvidia and AMD hardware to expand its data centres. And in a twist that completes the loop, Nvidia pays OpenAI for model access to integrate AI into its platforms and services.
The result is a financial flywheel spinning at incredible speed. Billions of dollars moving from one balance sheet to another, round and round.
Some call it the “circular economy of AI” – a bullish sign that the industry is scaling aggressively. Critics, meanwhile, argue this is little more than smoke and mirrors. And they may have a point. When a few huge companies are spending money they don’t fully have, debt and risk can build up fast, and overconfidence can hide potential problems.
For now, I’m taking this for what it is, and that’s a massive rollout of AI infrastructure
This is how every transformative industry has been built, after all.
When railroads expanded in the 19th century, investors didn’t wait for ticket revenues to justify laying tracks – they piled in capital, often recycling funds between companies to reach scale.
The same thing happened with oil in the early 20th century, and again with semiconductors in the late 20th. Each time, the upfront spending looked reckless. Each time, it laid the foundation for decades of growth.
Call it circular accounting if you want. The reality? Hundreds of billions of dollars are being deployed to build the backbone of the AI economy – chips, data centres, AI models, software tools and more.
Of course, that doesn’t automatically make these stocks a buy at any price. Nvidia and Oracle recently hit record highs, and AMD has soared more than +23% in one day. Momentum is powerful, but valuations are lofty.
But remember, it’s not just the giant names that will benefit…
Smaller, more reasonably priced companies are riding the AI wave too.
Think of firms that make essential components for AI hardware, manage and secure data, provide cloud and AI services, or develop software and automation tools. Even companies building AI-powered industrial equipment or enterprise software will see increased demand.
These are the unsung players quietly constructing the infrastructure that keeps the AI engine running, often at valuations that make sense for everyday investors.
In short – we’re watching the scaffolding of a new industrial system go up in real time.
Whether this loop ends in a boom, a bubble, or both, the infrastructure being built today will define the competitive landscape for the next decade.
Ignore the noise. Follow the capital. That’s where the real story of AI is being written. And follow South African investor if you want to know what to buy and profit from this megatrend.
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