Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

Summary

When Nvidia announced a $100 billion investment commitment to OpenAI in September 2025 , analysts immediately drew comparisons to the telecom bubble. The concern : is this vendor financing , where a supplier lends money to customers so they can buy the supplier’s products , a harbinger of another spectacular collapse? American tech companies will spend $300-400 billion on AI infrastructure in 2025, , exceeding any prior single-year corporate infrastructure investment in nominal dollars. David Cahn estimates the revenue gap has grown to $600 billion. I analyzed the numbers. The similarities are striking , but the differences matter. The Lucent Playbook Lucent’s revenue peaked at $37.92B in 1999 , crashed 69% to $11.80B by 2002 , never recovered. Merged with Alcatel in 2006. In 1999 , Lucent Technologies reached $37.92 billion in revenue at the peak of the dot-com bubble. Lucent was the #1 North American telecommunications equipment manufacturer with 157,000 employees & dominated markets alongside Nortel Networks (combined 53% optical transport market share). Behind the scenes , equipment makers extended billions in vendor financing to telecom customers. Lucent committed $8.1B , Nortel extended $3.1B with $1.4B outstanding , & Cisco promised $2.4B in customer loans. The strategy seemed brilliant : lend money to cash-strapped telecom companies so they could buy your equipment. Everyone wins—until the merry-go-round stops. When the bubble burst : 47 Competitive Local Exchange Carriers (CLECs) bankrupted 2000-2003 , including Covad , Focal Communications , McLeod , Northpoint , Winstar , Why they failed : $60B overbuild 1996-2001 , market saturation from identical business models , sudden funding collapse (Jan 2001 : billions available , Apr 2001 : zero) 33-80% of vendor loan portfolios went uncollected as customers failed & equipment became worthless Fiber networks were using less than 0.002% of available capacity , with potential for 60,000x speed increases. It was jus...