Key Takeaways
A financial analyst warned on May 6 that as much as 50 percent of the cloud computing backlog at hyperscalers like Microsoft and Amazon consists of circular contracts with artificial intelligence partners, creating what the analyst called an earnings “mirage.”
The commentary, which caused shares in some OpenAI partners to fall, questions the quality of Big Tech earnings that are heavily reliant on their own AI investments. "The board has also begun scrutinising Sam Altman’s aggressive push for additional compute capacity," The Wall Street Journal reported on April 28, a scrutiny echoed by OpenAI CFO Sarah Friar's warning that the company might struggle to honor future data-center contracts if revenue growth does not accelerate.
The concern centers on a feedback loop where cloud providers invest billions in AI companies, who then use the capital to purchase cloud services. The Information reported that Anthropic agreed to pay Google $200 billion over five years for cloud access, while OpenAI has a reported $300 billion computing partnership with Oracle for its Stargate data-center initiative. These deals contribute to a revenue backlog that The Information claims is worth $2 trillion across Amazon, Google, Microsoft, and Oracle from Anthropic and OpenAI alone.
The market reaction to the analysis was immediate, with shares of Oracle falling around seven percent and AI infrastructure provider CoreWeave dropping seven percent. The report amplified concerns about the sustainability of the AI boom's financing structure. While OpenAI’s revenue grew from $2 billion in 2023 to $6 billion in 2024, its user growth slowed from 42 percent in early 2025 to 13 percent by September, and only five percent of its roughly 900 million weekly users are paying subscribers.
This circular financing model has propped up valuations across the technology stack. Capital flows from investors to AI labs, then to infrastructure providers like Oracle and CoreWeave, and finally to chipmakers like Nvidia. Any slowdown in end-demand from the AI companies threatens to unwind this cycle. While a broader AI collapse is not forecast, the report suggests a competitive miss for OpenAI against more efficient rivals like Anthropic, which earns an estimated $211 per monthly user compared to OpenAI's $25.
The warning puts a spotlight on the quality of cloud revenue and the deep financial ties between hyperscalers and the AI models driving their growth. Investors will be looking for more transparency on the nature of these contracts in upcoming quarterly earnings calls.
This article is for informational purposes only and does not constitute investment advice.
