Hua Er Jie Jian Wen·2025-10-09 04:18Core Insights - The rapid development of artificial intelligence (AI) is reshaping the technology industry, but it also raises concerns about systemic risks due to complex capital flows and business relationships within the AI ecosystem [1][2][3] - Morgan Stanley's report highlights the increasing "circularity" in the AI ecosystem, where major players are interconnected through investments, acquisitions, and revenue-sharing agreements, complicating risk assessment for investors [1][2] AI Ecosystem Dynamics - The core dynamics of this circularity are evident in the relationships between AI giants and their suppliers, with OpenAI's significant procurement commitments reshaping the financial outlook of its suppliers [2][3] - OpenAI's contracts account for approximately two-thirds of Oracle's remaining performance obligations (RPO) and about 40% of CoreWeave's RPO, contributing over $330 billion to a total of approximately $880 billion in RPO across Microsoft, Oracle, and CoreWeave [2][3] Supplier Risks - The concentrated customer relationships mean that the future growth of these suppliers is closely tied to OpenAI's success, creating potential risks if demand for AI services slows [3][11] - Major data center operators are making substantial capital commitments, with procurement promises increasing by $100 billion to $330 billion over the past year, alongside leasing commitments rising to $340 billion [3] Complex Financial Relationships - The report outlines intricate financial relationships within the AI ecosystem, including equity investments, cross-shareholdings, and revenue-sharing agreements that obscure the true business logic [4][6] - For instance, NVIDIA plans to invest $100 billion in OpenAI, while also holding over 5% of CoreWeave's shares valued at $2.9 billion [6] Remaining Performance Obligations (RPO) - The surge in RPO is a direct indicator of the current AI boom, with Oracle signing a $300 billion contract with OpenAI, marking one of the largest deals in history [8][11] - OpenAI has also entered into multiple agreements with CoreWeave worth over $22 billion, further illustrating the scale of commitments in the AI sector [8] Disclosure Concerns - The report emphasizes the need for enhanced disclosure in four key areas: related-party transactions, customer concentration, revenue-sharing arrangements, and vendor financing [14][16] - For example, Microsoft has not disclosed the specifics of its multi-billion dollar business dealings with OpenAI, raising concerns about the fairness of these transactions [16] Capital Flow Breakdown - The report provides a detailed breakdown of capital flows in the AI industry, highlighting significant contracts and commitments from major players like NVIDIA, Oracle, and Microsoft [6][8][9] - These commitments, while legally binding, may lead to renegotiations in the future, especially if key customers face financial difficulties [11]