Background: OpenAI is the company behind ChatGPT and one of the central players powering the generative AI boom since 2022. But building and running cutting-edge AI models isn't cheap... it requires enormous computing power, infrastructure and capital.

What happened: Now, OpenAI has raised a staggering $110 billion USD, pushing its valuation to $730 billion USD. And this is up from $500 billion just a few months ago. This $100 billion USD raise is more than double its previous record-breaking round last year.

What else: Amazon is investing $50 billion, while Nvidia and SoftBank are each tipping in $30 billion. And here's the twist: many of these investors are also OpenAI's customers as well as suppliers. It's all getting a little too incestuous around here.

What's the key learning

💡The "AI investing merry-go-round" is the circular cycle where top-tier technology companies and AI startups fund each other. Tech giants invest billions into AI labs like OpenAI and Anthropic, those labs spend heavily on Nvidia chips and cloud services from the same tech giants... meaning some of that capital flows straight back to investors as revenue.

💡This circular cycle can inflate revenue and valuations, even if external demand isn't expanding at the same speed. With companies like Microsoft, Amazon, and Nvidia all investing heavily while also supplying infrastructure, the ecosystem becomes deeply interconnected.

💡The big risk? The industry may be building AI capacity faster than real-world demand can absorb it. So if customer adoption doesn't catch up, today's massive valuations could face pressure.