Wonder why markets are edgy about the “circular nature” of AI investing? We’ve got the rundown.

The global financial press wants the AI bubble to pop so hard you can practically feel it in the air this morning after jitters rattled Wall Street on Wednesday.

What happened? Oracle’s stock tumbled more than 5% yesterday after Blue Owl Capital — its primary data center financing partner — pulled out of a USD 10 bn project, triggering a broader tech selloff that sent the Nasdaq down 1.8% to a three-week low. The Dow and S&P followed suit.

What’s really spooking traders: It’s not one deal, but the structure of the entire AI buildout. Investors are growing uneasy about what’s become common to call the “circular nature” of AI spending. (A bit confused about what this “circular nature” thing is? More on that below.)

That’s brought the dotcom question back on the op-ed pages and on business TV. By nearly every valuation metric, US equities are at their most expensive since 2000. The WSJ’s James Mackintosh goes deep into the structural parallels: heavy infrastructure spending financed by debt (fiber optic cables then, data centers now), a single-minded market focus on one theme, and “picks and shovels” suppliers being the ones who really rake-in the profits (Cisco then, Nvidia now).

That backdrop has traders spooked about today’s US consumer price data. The figure for November is due out this morning (US East coast time). Economists expect headline inflation at 3.1% year-on-year — a cooler print could calm nerves, and a hotter one could accelerate the selloff.

Enterprise Explains

Confused about the “circular nature” of AI investment? We’ve got the rundown for you, because it’s going to be in the headlines more and more heading into 2026. It’s a lot, but it’s not rocket science — just follow the money:

It starts with the data centers Big Tech is building. Oracle, Microsoft, Google, and Amazon are collectively committing hundreds of bns to AI infrastructure. Oracle alone has USD 248 bn in data center lease commitments — up nearly 150% in just three months.

Those data centers are serving AI companies including OpenAI and Anthropic, who need massive “compute” to train and run their models. The Oracle project that Blue Owl pulled out of? It’s being built for OpenAI.

But Big Tech is also funding the AI companies… Microsoft has poured bns into OpenAI, and Amazon (as of yesterday) looks like it’s following suit. Google and Amazon are investors in Anthropic. Oracle and SoftBank are partners in OpenAI’s massive USD 500 bn (yes, half-a-tn) Stargate infrastructure project. (That’s *far* from an exhaustive list…)

And the AI companies are losing money hand-over-fist. Generative AI is, as the WSJ put it, “priced well below what it costs to produce.” OpenAI, Anthropic, and others are burning cash, subsidizing usage to build market share. Google and Microsoft are the only players using their own cash to grow.

That’s the circle: Tech giants invest in AI startups. The AI startups pay tech giants for cloud compute. Tech giants book revenue and justify more infrastructure spending. The spending is financed by debt — and the debt is repaid by lease income from … the very same AI startups that are burning investor cash.

The worry: What if someone breaks the circle? If investors stop writing tickets because, say, corporate buyers slow their AI rollouts on the back of slow-to-materialize returns on expensive AI pilot projects? Then it all grinds to a stop: The data centers are still there. AI companies, Big Tech, and others building for them are still saddled with the debt they took on to build-out data centers. And the tenants can’t pay.

JP Morgan is (gently) urging caution, Bloomberg has a data-packed rundown if you want more, and pieces by both The Atlantic and the New York Times highlighting a once-obscure company named CoreWeave are must-reads.

MARKETS THIS MORNING-

Asian markets tracked Wall Street losses amid the AI-fueled sell-off, with Japan’s Nikkei leading losses, and South Korea’s Kospi following closely behind. Over on Wall Street, futures are hovering near the flatline as investors await inflation data out later today.

THE CLOSING BELL-

The EGX30 fell 1.2% at yesterday’s close on turnover of EGP 5.4 bn (0.8% above the 90-day average). Local investors were the sole net buyers. The index is up 39.6% YTD.

In the green: Misr Cement (+6.2%), Raya Holding (+4.9%), and Beltone Holding (+3.5%).

In the red: Orascom Development (-3.4%), CIB (-2.8%), and Ibnsina Pharma (-2.1%).