The artificial intelligence boom dominating markets and headlines may not be as organic as it appears, according to former Intel CEO Pat Gelsinger. In an interview with Yahoo Finance\u2019s Market Catalysts<\/em>, Gelsinger cautioned that the sector\u2019s rapid growth is increasingly being propped up by tech companies funding their own demand \u2014 a dynamic he calls \u201ccircular financing.\u201d<\/p>\n\n\n\n Gelsinger, now executive chairman at semiconductor startup xLight, said the biggest players are committing revenue that\u2019s essentially self-generated. \u201cThe quality of that revenue simply isn\u2019t as good,\u201d he explained. \u201cRather than you putting your capital at risk, I\u2019m putting my capital at risk. I\u2019m buying my own future revenue.\u201d<\/p>\n\n\n\n Today\u2019s AI ecosystem is defined by massive investments and interlocking financial commitments among the industry\u2019s leaders \u2014 Microsoft and OpenAI, Google and Anthropic, Amazon and its AI partners. Microsoft invests heavily in OpenAI, which then spends billions on Microsoft Azure cloud services powered by Nvidia GPUs. Google funds Anthropic, which in turn purchases compute from Google Cloud. These feedback loops, Gelsinger warns, create an illusion of unstoppable demand that may not reflect real-world adoption.<\/p>\n\n\n\n This isn\u2019t the first time tech has subsidized its own growth \u2014 cloud providers did it a decade ago \u2014 but the scale in AI is unprecedented. And unlike in previous cycles, a physical constraint looms: power.<\/p>\n\n\n\n \u201cWe\u2019re not capital-limited in AI. We\u2019re energy-limited,\u201d Gelsinger said, noting that training next-generation models requires enormous amounts of electricity. The grid, he argues, is becoming the binding bottleneck.<\/p>\n\n\n\n Despite the warning, Gelsinger remains optimistic about AI\u2019s long-term potential and praised Google\u2019s recent momentum in the space. His comments come as he transitions into his new role at xLight, which recently secured a $150 million letter of intent with the U.S. Commerce Department under the CHIPS and Science Act \u2014 a sign that Washington is betting heavily on next-generation semiconductor technology.<\/p>\n\n\n\n As investors look for clarity on whether AI demand is sustainable or self-reinforcing, Gelsinger\u2019s remarks highlight a growing debate about the true foundation of the AI boom \u2014 and the limits that may soon test it.<\/p>\n\n\n\n