Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#1

Post by cl42 » Wed, Jul 29, 2026, 6:57 PM UTC

Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals
emergingtrajectories.com

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#2

Post by cl42 » Wed, Jul 29, 2026, 7:08 PM UTC

Observing how the US stock market is behaving this week (up-down-up-down...), I feel like many investors don't appreciate the distinction between good and bad circularity.

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#3

Post by andiey » Wed, Jul 29, 2026, 7:13 PM UTC

If healthy and risky circular financing deals look similar at first, how can investors or regulators tell when a circular deal has crossed the line into something dangerous...especially when it's off the balance sheets?

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#4

Post by cl42 » Wed, Jul 29, 2026, 7:14 PM UTC

andiey wrote: post #3

If healthy and risky circular financing deals look similar at first, how can investors or regulators tell when a circular deal has crossed the line into something dangerous...especially when it's off the balance sheets?

This has been bugging me quite a bit. I think the more "off-balance-sheet" the deal is, the shadier it gets... But it's really hard to tell early on.

I actually think Nvidia's deals have been above-board, generally speaking, because they are transaprent.

Less true for Meta and Terawulf.

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#5

Post by gadflyinyoureye » Wed, Jul 29, 2026, 7:15 PM UTC

cl42 wrote: post #2

Observing how the US stock market is behaving this week (up-down-up-down...), I feel like many investors don't appreciate the distinction between good and bad circularity.

Part of the market issues this week are Korea imploding and Japan about to implode. Japan's bond rate moving up could mean the end of the carry trade. Korea apparently has many stock tickers but only two distinct companies behind them. This caused their market and their overly leveraged retail investors a lot of pain.

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#6

Post by cl42 » Wed, Jul 29, 2026, 7:17 PM UTC

gadflyinyoureye wrote: post #5

cl42 wrote: post #2

Observing how the US stock market is behaving this week (up-down-up-down...), I feel like many investors don't appreciate the distinction between good and bad circularity.

Part of the market issues this week are Korea imploding and Japan about to implode. Japan's bond rate moving up could mean the end of the carry trade. Korea apparently has many stock tickers but only two distinct companies behind them. This caused their market and their overly leveraged retail investors a lot of pain.

Good point. Do you think the NASDAQ selloff will recover once Korea stabilizes?

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#7

Post by firasd » Wed, Jul 29, 2026, 7:18 PM UTC

I think the real question in all sorts of financial setups is really “is the dollar actually worth a dollar”. So when company A invests in company B which buys from company A the actual question is whether the valuation of the investment and the valuation of the purchase is correct or are they getting high on their own supply

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#8

Post by Animats » Wed, Jul 29, 2026, 7:21 PM UTC

Whether inference hardware will be a commodity remains to be seen. We had twenty years of most servers being x86-64. That's commodity compute. Inference hardware isn't a mature architecture yet. There will be progress and obsolescence.

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#9

Post by dragontamer » Wed, Jul 29, 2026, 7:25 PM UTC

firasd wrote: post #7

I think the real question in all sorts of financial setups is really “is the dollar actually worth a dollar”. So when company A invests in company B which buys from company A the actual question is whether the valuation of the investment and the valuation of the purchase is correct or are they getting high on their own supply

A recession is a cash/dollar bubble.

First cash/dollars are considered bad so they collapse in price. When the psychology shifts, suddenly the dollar climbs in value and itself bubbles over, causing a recession.

Re: Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals

#10

Post by gadflyinyoureye » Wed, Jul 29, 2026, 7:34 PM UTC

cl42 wrote: post #6

gadflyinyoureye wrote: post #5

Earlier quoted context omitted.

Part of the market issues this week are Korea imploding and Japan about to implode. Japan's bond rate moving up could mean the end of the carry trade. Korea apparently has many stock tickers but only two distinct companies behind them. This caused their market and their overly leveraged retail investors a lot of pain.

Good point. Do you think the NASDAQ selloff will recover once Korea stabilizes?

Eventually. I'm a bit concerned about it right now. I think SpaceX showed that the AI story is weaker than promoted. This will make people wonder about all the money going into it. If the bubble pops, the blow back on that particular index will be huge. Maybe dotcom bursting huge. But after 15 years QQQ move positive.