Gurley calls circular deals horrific and says auditors should not have approved them.
“I think the circular deals are horrific. I don't think the auditor should have approved them. And I think whenever you eventually have an unwinding, they're gonna make it worse because they won't be sustainable.”
Gurley argues circular deals explain why Nvidia's multiple won't go higher despite strong growth.
“People wanna understand why the Nvidia multiple won't go higher. I think it's the circular deals. Like if they're not material, don't do them.”
Gurley critiques circular deals where cloud providers fund AI companies to spend on their own services.
“Imagine you're a cloud service provider and you notice that this company, Anthropic, wants to develop this model. It's gonna cost maybe $5,000,000,000, but they don't have that money.”