On November 20, 2025, trading algorithms identified what may become the largest accounting fraud in technology history—not in months or years, but in 18 hours.

The current situation bears structural similarities to three major accounting frauds: Enron (2001), WorldCom (2002), and Lucent Technologies (2000).

Lucent, once America’s largest telecommunications equipment manufacturer, grew revenue through vendor financing arrangements. The company lent money to telecom carriers to purchase Lucent equipment, booking the equipment sales as revenue while the loans appeared as receivables. When carriers couldn’t repay, Lucent took $8.7 billion in writeoffs.

Lucent’s DSO peaked at 64 days before the fraud became public. Nvidia’s current 53-day DSO remains below that threshold but exceeds its historical baseline by the same percentage that preceded Lucent’s collapse.

Enron used Special Purpose Entities to hide debt and inflate revenue. These entities existed as legally separate companies but were economically controlled by Enron. The structure created artificial revenue through transactions with entities Enron itself funded.

The xAI SPV structure mirrors this approach. Nvidia provides equity capital to an entity that exists primarily to purchase Nvidia products. The transaction appears as an arms-length sale in Nvidia’s accounting, but economically, Nvidia is funding its own revenue.

  • flango@lemmy.eco.br
    21·
    3 days ago

    The “Vibe Revenue” Admission

    On November 14, 2025, at the Web Summit conference in Lisbon, multiple AI company CEOs acknowledged this dynamic in public for the first time.

    Brian Chesky, CEO of Airbnb, stated: “There’s a lot of vibe revenue in AI. Companies are talking about billions in pipeline that may never materialize.”

    Vinod Khosla, venture capitalist and prominent AI investor, told the audience: “Ninety-five percent of AI startups will fail. The question is which five percent become Google.”

    Sam Altman, CEO of OpenAI, said: “We’re in uncharted territory. Nobody knows if this scales to AGI or hits a wall at GPT-5.”

    These admissions carry weight because they contradict the growth narratives supporting current valuations. OpenAI, valued at $157 billion in its most recent funding round, reported $3.7 billion in revenue for 2025 according to The Information. The company simultaneously disclosed operating expenses of $13 billion, resulting in a $9.3 billion annual cash burn.