AI funding announcements are getting ridiculous. Nvidia supposedly invests big in OpenAI, then OpenAI uses that money to buy Nvidia's overpriced GPUs. It's circular financing disguised as growth.
Black Forest Labs wants a $4 billion valuation for image generation tech after launching just a year ago. They're partnering with Mistral AI, which hit a $14 billion valuation. European AI companies are chasing Silicon Valley valuations based on partnerships, not fundamentals.
Black Forest Labs basically took Stable Diffusion, improved it, and wants $4 billion. You can run similar image generation locally on an RTX 4090 using open-source models for free.
The Financial Times calls them "one of the few European companies developing its own AI models," but that's like calling someone who modifies an open-source project a "core developer." They're fine-tuning existing diffusion models. Useful work, but worth more than most Fortune 500 companies?
The Nvidia-OpenAI deal isn't really an investment. Nvidia gives OpenAI money, then OpenAI uses it to buy Nvidia's overpriced H100 clusters. It's like "investing" in a lemonade stand by lending money that can only be spent at your lemonade supply store.
Same pattern as the cloud partnerships boom. Microsoft's OpenAI investment looked innovative until you realized it was mostly Azure credits. Amazon did the same with Anthropic - billions that flow back to AWS.
Oracle's massive OpenAI commitment is betting on explosive growth that might not materialize. They're wagering huge cloud capacity deals on one customer continuing to scale exponentially.
The UAE President is meeting with OpenAI's CEO about AI partnerships. When sovereign wealth funds start throwing oil money at AI deals, we're in peak bubble territory.
European companies like Black Forest Labs are competing against American companies with unlimited cloud credits and circular financing. That's why they're partnering with Mistral AI - they need alliances for distribution.
Both Black Forest and Mistral are open-source. When your core tech is freely available on GitHub, how the hell do you justify billion-dollar valuations? "Our competitive advantage is execution?" Good luck with that when someone forks your model and runs it for 90% less.
This echoes the 2000 dot-com bubble. Companies announced massive deals, but money just shifted between the same group of companies. Cisco financed customer equipment purchases, which looked like growth until everyone realized it was vendor financing dressed up as revenue.
Elon's calling out Stargate project funding because he knows how this works. Announcing massive commitments is easy - having the money available is harder. Half these "investments" exist in press releases and PowerPoint decks.
The concentration is what scares me. Nvidia, Microsoft, OpenAI, Oracle - they're all investing in each other with the same money flowing in circles. When one of them has problems, it'll cascade through the whole ecosystem. Regular users get screwed when this house of cards falls over.