| Ticker | Name | Research | View | What's said | Source |
|---|---|---|---|---|---|
| MU | Micron Technology | QT · SA · STK · FA | Neutral | The memory face of the circularity moving "beyond NVDA": its rally was so extreme it briefly replaced Berkshire Hathaway as the largest constituent in the Russell 1000 Value index. The Compound Bros call the buying "fully rational" (EPS "quadrupled," "throw out everything you know," "almost like IPOs"). Paulo's frame: hyperscaler capex is "inextricably linked" to chipmaker FCF, so memory's earnings are part of the same flow. He regrets not owning it ("I had this") but flags it as circularity/mania evidence, not a stated buy. | read ↗ |
| GOOGL | Alphabet (Google) | QT · SA · STK · FA | Neutral | The poster child of the Other Income circularity: booked $38bn of Other Income in 1Q (with Amazon, $53bn combined ≈ 60% of their net income; $49bn from private-stake revaluations). Alphabet is the largest investor in Anthropic — whose $200bn compute commitment to Google both grows Google's revenue backlog and, via successive up-rounds, marks Google's stake higher into "earnings." Cited as evidence, not a fresh stance (his standing GOOG-long view is separate). | read ↗ |
| AMZN | Amazon | QT · SA · STK · FA | Neutral | The other Other Income offender: reported ~$16bn of Other Income in 1Q. A large Anthropic backer whose $100bn compute commitment feeds the same loop (invest → mark up the stake → book the gain as earnings while booking the cloud revenue). Evidence in the circularity critique, not a stance. | read ↗ |
| ORCL | Oracle | QT · SA · STK · FA | Neutral | The extreme of the off-balance-sheet commitment problem (Morgan Stanley, "AI: Off Balance Sheet, On the Hook"): lease + purchase commitments running over 700% of forward operating cash flow (vs >100% for GOOG/META/AMZN/MSFT). "Most obligations remain off balance sheet." Consistent with his standing datacenter-credit-posterchild view; cited as evidence here. | read ↗ |
| META | Meta Platforms | QT · SA · STK · FA | Neutral | Named in the hyperscaler group; per Morgan Stanley its commitments run ~1.7x forward operating cash flow — "over 100%… not free cashflow, but operating!" A scale-of-deterioration data point in the off-balance-sheet critique, no fresh stance. | read ↗ |
| MSFT | Microsoft | QT · SA · STK · FA | Neutral | One of the five hyperscalers (GOOG, AMZN, MSFT, ORCL, META) "torching revenue growth and free cashflow on capex for chips and datacenters," with lease/purchase commitments over 100% of forward operating cash flow. Group reference, no individual stance. | read ↗ |
| CRWV | CoreWeave | QT · SA · STK · FA | Neutral | Named as the archetypal "neocloud" in the revenue-circularity chart — NVDA "sells GPUs to neoclouds like Coreweave" that are funded by NVDA equity stakes or hyperscaler-anchored rounds. A structural example of the loop, not a stance. | read ↗ |
| BRK.B | Berkshire Hathaway | QT · SA · STK · FA | Neutral | Scale reference, not a stance: Micron's parabolic rally "briefly replaced Berkshire Hathaway as the largest constituent in the Russell 1000 Value index" — used to convey how extreme the memory move became. | read ↗ |
| OpenAI | OpenAI (private) | — | Neutral | One of the two private AI labs at the center of the loop: funded by hyperscalers at successively higher rounds, then booking enormous cloud commitments back to them. The circularity only reverses once it "becomes a public entity where the stock price at quarter end is the one true mark" — which forces it to (A) generate cash and (B) never draw down, or the hyperscaler Other Income machine runs in reverse. | read ↗ |
| Anthropic | Anthropic (private) | — | Neutral | The marks that make the myth: valuation ran $183bn (Sep-25) → $380bn (1Q26), and the WSJ reported a mooted $30bn round at a $900bn valuation — capital raised to fund $200bn (Google) / $100bn (Amazon) compute commitments. Alphabet is its largest investor, Amazon among its largest backers; their stake mark-ups are booked as "Other Income." The purest expression of the Great Circularity. | read ↗ |
| NVDA | Nvidia | QT · SA · STK · FA | Negative | The original revenue-circularity node (his standing funding short): sells GPUs to neoclouds/labs "funded either by NVDA's equity stakes to pay for the chips, or… massive funding rounds anchored by hyperscalers." Cited as the base layer the circularity has now grown "beyond" — into memory and, worse, into the earnings line. | read ↗ |
Stances reflect the framing in this note — the hyperscalers (GOOG, AMZN, MSFT, ORCL, META), Micron, CoreWeave and the private labs are cited as evidence in a circularity/earnings-quality critique (Neutral), not fresh single-name buys; NVDA is Paulo's standing funding short (Negative). The Russell 1000 Value and S&P 500 are indices, not tickers. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
Jargon-free notes on the names carrying the circularity argument. (Plain-language companion; renders on each ticker's consolidated page.)
Micron makes memory chips — the DRAM and high-bandwidth memory that AI servers need in huge quantities. Its profit forecast suddenly went up fourfold, the stock went parabolic, and it briefly became the single biggest company in a major "value" stock index — displacing Warren Buffett's Berkshire. Cheerleaders say that's "fully rational" because the earnings really did quadruple. Paulo's worry isn't that the earnings are fake exactly, but that they're the flip side of hyperscalers spending money they don't have on chips and data centers — so memory's boom is bolted to the same wobbly capex machine. He isn't calling it a buy or a short here; he's using it as Exhibit A that the mania has spread from Nvidia into the whole chip complex, and admits he wishes he'd owned the move.
Here's the trick Paulo is pointing at. Google puts money into a private AI company (Anthropic). That company's "value" keeps getting stamped higher every few months in new fundraising rounds. Because Google owns a piece, it gets to write up the value of its stake and report that paper gain as profit — "Other Income" — a whopping $38 billion of it in one quarter. At the same time, Anthropic promises to spend $200 billion buying Google's cloud services, which boosts Google's sales. So Google's own investment inflates both its revenue and its reported earnings, even though little real cash changed hands. Paulo isn't turning bearish on Google specifically; he's flagging that a big chunk of Big Tech's celebrated "earnings" is really a mark-up on stakes the companies themselves are pricing.
Amazon runs the same play as Google: it invested in Anthropic, gets to mark that stake up as the valuation climbs, and booked roughly $16 billion of "Other Income" from these kinds of gains in a single quarter — while Anthropic separately commits to spend $100 billion on Amazon's cloud. Investment goes in, the mark goes up, the gain shows up as profit, and the customer's spending shows up as revenue. Paulo's point is that when you strip out these self-referential paper gains, the underlying cash generation is far weaker than the headline earnings suggest.
Oracle is the most stretched example of a related problem: it has signed contracts to buy and lease AI infrastructure worth more than seven times the cash its operations generate in a year. Most of those obligations don't even show up as debt on the balance sheet yet, because accounting lets companies delay recording them until the gear is delivered or a payment becomes "probable." Paulo treats Oracle as the clearest sign that the AI build-out is being financed with promises the cash flow can't currently cover — and notes those very contracts are being used to back private-credit loans, so the risk quietly leaks into the credit market too.
Meta gets named as one more hyperscaler whose AI commitments have blown past what its business throws off in cash — its purchase and lease obligations run about 1.7 times its yearly operating cash flow. Paulo stresses the word operating (before capex): even measured generously, the promises exceed the cash. It's a data point in his larger case that the whole group is spending on the come, funded by optimism rather than cash on hand.
Nvidia sits at the base of the loop: it sells the AI chips, but many of its customers can only afford them because Nvidia itself, or the big cloud companies, funded them in the first place — so Nvidia is partly buying its own sales. That's the "revenue circularity" everyone now half-knows about. Paulo's new warning is that the game has grown beyond Nvidia into memory chips and, more dangerously, into the earnings statements of the cloud giants. Nvidia is his standing "funding short" — a bet against the company because the cash flowing through this circle is ultimately recycled venture money, wonderful until someone asks for their money back.
Anthropic is the engine of the whole scheme in Paulo's telling. Its "value" leapt from $183 billion to $380 billion in a couple of quarters and is reportedly being shopped at $900 billion — and it uses the cash it raises to promise hundreds of billions in spending to its own investors, Google and Amazon. As long as each new round is priced higher, Google and Amazon can keep marking up their stakes and calling it profit. The danger: none of these prices is set by a real public market. The moment Anthropic (or OpenAI) actually lists on a stock exchange, its share price becomes the "one true mark" nobody can fudge — and if it ever falls, the hyperscalers' paper profits go into reverse.
OpenAI plays the same role as Anthropic on the other side of the board — funded by hyperscalers at ever-rising valuations, then handing much of that money back as commitments to buy their cloud computing. Paulo's key point is what happens when it goes public: right now its value is whatever the insiders say it is, but a public listing forces a real, unfudgeable price every quarter. That's the pin near the balloon — the company would suddenly need to (a) actually make money and (b) never let its stock fall, or the entire mark-up-your-own-investment machine unwinds.
Key points extracted from the paid Substack post (in transcript.txt) for personal study. Not investment advice. © Paulo Macro for source material.