The artificial intelligence boom may not be as real as it seems.
That’s according to Pat Gelsinger, former CEO at Intel (INTC), who said the biggest players in AI are now funding their own growth.
“The quality of that revenue that they’re committing in the future simply isn’t as good, right? Because essentially I’m buying my own future revenue,” Gelsinger, now executive chairman at xLight, said on Yahoo Finance’s Market Catalysts. “Because rather than you putting your capital at risk, I’m putting my capital at risk.”
Deals, investments, and credits are ricocheting between Microsoft (MSFT), OpenAI (OPAI.PVT), Google (GOOGL, GOOG), Anthropic (ANTH.PVT), and Amazon (AMZN), forming what Gelsinger calls “circular financing.” The result is an ecosystem where AI providers are effectively underwriting their own growth. That may make headlines, but it raises questions for investors counting on real-world adoption and sustainable margins.
The circular structure isn’t new in tech. Cloud providers subsidized early usage a decade ago. But the scale in AI is unprecedented. For example, Microsoft is a major investor in OpenAI, which in turn spends billions on Microsoft’s Azure cloud services that rely heavily on Nvidia’s (NVDA) graphics processing units (GPUs). Meanwhile, Google is pouring money into Anthropic, which is also buying compute from Google Cloud.
Read more: How to protect your portfolio from an AI bubble
Those big balance sheets are being used “in a creative way,” Gelsinger said, but they create the illusion of unstoppable demand — even though corporate buyers, regulators, and the power grid struggle to keep pace.
He added that demand funded by vendors isn’t the same as customers opening their wallets. Still, he’s not sounding alarms, as the main players are “healthy companies with healthy balance sheets.”
However, even if more customer demand emerges, the AI boom has a physical ceiling: electricity. “We’re not capital-limited in AI. We’re energy-limited in AI,” Gelsinger said. Training frontier models requires breathtaking amounts of compute — and those chips run hot. The grid is a binding constraint.”
Gelsinger’s comments come as he begins a new phase of his career. After abruptly stepping down from Intel in December 2024 — following tension with the board — he resurfaced as executive chair of semiconductor startup xLight in March 2025.
The company, which touts that it’s “building the world’s most powerful lasers,” recently announced a $150 million letter of intent with the US Commerce Department. The nonbinding agreement is reportedly partially funded by the 2022 CHIPS and Science Act, which aims to restore US semiconductor leadership. Though preliminary and subject to revision, the deal signals interest on Capitol Hill in the nascent technology.
