Bloomberg examines how circular funding is fueling the AI boom

The AI boom has a funding engine, and a good chunk of it appears to be AI companies writing checks to other AI companies. Bloomberg reporting from October 12-13, 2026, describes a circular funding model that is accelerating infrastructure spending. The same model may also be deepening financial imbalances that look uncomfortably familiar to anyone who remembers 2008. The basic loop is simple to sketch. Company A invests in Company B. Company B then spends that money buying products or services from Company A. Everyone’s revenue goes up, and everyone’s valuation looks healthier. What the numbers show The most detailed data comes from the Bank for International Settlements. BIS Bulletin 137, published on October 1, 2026, examined funding flows across 1,246 AI firms between 2021 and 2025. Its headline finding: over 55% of incoming investment value to those firms came from other AI firms. The flows run the other way too. According to BIS, 28.7% of outbound investment by AI firms went to other AI firms. The supply-chain angle is where things get especially tangled. BIS found that 58% of intra-AI deal value involved commercial supply-chain relationships. That means investors were frequen...