This morning, AMD and OpenAI announced a partnership that—on paper—looks like a potential win-win. AMD supplies the chips, OpenAI buys the chips, trains on the chips, and uses the results to… design better chips….to buy more chips…all while the more AMD chips OpenAI buys, the more of AMD OpenAI starts to own in AMD stock (through warrants)…getting dizzy. To be expected. That’s ok. Or is it not? Do I even have this straight? How could I?

That’s circularity.

I have seen reference to circularity more and more, and it has become a new favorite in the tech and sustainability world—used to describe self-reinforcing systems where outputs feedback as inputs. Circular economies reuse resources. Circular software improves itself. Circular financing recycles capitalⁱⁱ . A lot of sounds good until I get to circular financing and think back to my youth and being fascinated by the concept of a perpetual motion machine…and, according to ChatGPT this morning, yes Dane perpetual motion is still impossible, at least according to the laws of physics as we understand them today.

So as I understand it and IMO, in markets, circularity can start to sound a lot like reflexivity ⁱⁱⁱ —George Soros’ word for feedback loops between perception and price, introduced in his 1987 book The Alchemy of Finance (THIS BOOK BY THE WAY IS NOT AND I STRESS NOT AN EASY READ). When optimism funds expansion, expansion validates optimism, and optimism funds more expansion… you get what looks suspiciously like a bubble.

The Circle Tightens

Look at the “A.I. Circular Deal” graph I saw last week.

Each arrow connected a company investing in its own future through its customers, suppliers, or competitors. Nvidia funds AI startups → AI startups buy Nvidia chips → Nvidia’s profits fund more AI startups.

Now add AMD and OpenAI to the loop. The circle just got bigger and tighter.

The problem with circles is they have no exits. Everyone inside depends on everyone else to keep believing. When that belief wavers or when funding slows or demand plateaus, the system may not bend. It would then likely break.

Search Interest, Search for Meaning

A quick Google Trends and ChatGPT search comparison for “bubble” shows the word itself spiking every time prices do. We talk about bubbles most when we’re already in them.

Which raises the question: Can we be in a bublle if everyone already thinks we’re in a bubble?

Maybe not immediately. Awareness doesn’t deflate optimism, it intellectualizes it. Investors say, “Yes, it’s frothy, but this time it’s different.” Until it isn’t.

Circular References

In Excel, a circular reference happens when a formula refers back to itself. The program flashes a warning: “Circular reference detected.”

The sheet may keep running, but the math stops making sense. Or it breaks.

Maybe that’s where we are in markets today—still running, still computing, but with logic starting to fold back on itself. With warning in excel, you can fix the reference and be on your way. Will we in the market?

Final Thought

Circularity can be brilliant design, or a dangerous delusion. The difference is whether the loop creates value or just velocity.

As investors, our job isn’t to break the loop. It’s to know when it’s producing real output or when it’s just spinning (out of control?).

Being a long term user of Excel, I know it knows how to flag a circular reference… does ChatGPT, OpenAI and all of the investors know how to flag a circular reference?

Curious how circularity might be showing up in your own portfolio? 

Schedule a conversations with us today.

ⁱⁱHere’s a bit more context from ChatGPT:

• In tech and sustainability, circularity is indeed a buzzword describing self-reinforcing or regenerative systems — where outputs become inputs rather than being discarded.
• Circular economy: a widely recognized concept promoted by the Ellen MacArthur Foundation, referring to reusing, recycling, and regenerating materials to minimize waste and resource extraction.
• Circular software or AI systems: used metaphorically to describe feedback-driven models that “learn” or “improve themselves” through continuous iteration.
• Circular financing: a newer application, often referring to financial flows that reinvest gains back into the same ecosystem — e.g., venture investors funding infrastructure that increases the value of their own holdings (as seen in AI and cloud partnerships).

ⁱⁱⁱThe Alchemy of Finance (1987) – This is the cornerstone text. Soros outlines how markets are not purely driven by fundamentals but by feedback loops between perception and reality — what he calls “reflexivity.” He applies it to currency markets, equity booms and busts, and his own trading diary from the 1980s. THIS BOOK BY THE WAY IS INTENSE. NOT AN EASY READY.  

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About the Author

Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

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