Welcome to Eye on AI, with AI reporter Sharon Goldman. In this edition, the ‘loopification’ of AI…Trump eyes state AI laws…Meta will partner with Yann LeCun’s new startup…andAI is now the fastest-adopted technology in history.
On Tuesday, Microsoft, Nvidia, and Anthropic announced strategic partnerships that Microsoft CEO Satya Nadella summed up this way: “We are increasingly going to be customers of each other.”
How very “Here we go round the mulberry bush,” right? Microsoft buys Anthropic’s models; Anthropic runs Claude on Microsoft’s Azure cloud; Anthropic buys Nvidia’s chips; and both Microsoft and Nvidia invest in Anthropic. If that sounds like a big circle going round and round and back again… that’s because it is. And honestly, it’s making me dizzy.
But this trio-loop-de-loop isn’t an anomaly. These days, it’s becoming the dominant business model of the AI industry. Hyperscalers, model labs and infrastructure companies are increasingly forming closed-loop partnerships that function as a kind of AI mutual-assurance pact: everyone is a partner, a vendor, and a customer at the same time.
For Nvidia, which blew past revenue targets in its Q3 earnings yesterday, posting a 62% surge in revenue growth, this kind of circle game has been a key to its success over the past three years. As Fortune’s Shawn Tully recently detailed, the company has been building its own circular ecosystem by investing in—and sometimes financing—its own customers, from OpenAI to CoreWeave. The goal is to engineer a perpetual-motion machine of GPU consumption—a way to guarantee demand in a world where hyperscalers are trying to build their own chips. For example, in September Nvidia committed to investing up to $100 billion in OpenAI. As part of the agreement, OpenAI would purchase “at least 10 gigawatts worth of capacity in Nvidia AI chips. “It’s very murky,” Seaport analyst Jay Goldberg said recently. ““It’s very unclear what the motivation here is … To what degree is Nvidia investing versus buying demand or subsidizing demand [for its chips]?”
