Nvidia (NVDA) Stock: $100 Billion OpenAI Deal Stalls as Doubts Emerge

TLDR

• Nvidia’s planned $100 billion investment in OpenAI has stalled after internal doubts emerged at the chip company
• CEO Jensen Huang privately described the September 2023 deal as nonbinding and criticized OpenAI’s business discipline
• The companies are now discussing a smaller equity investment worth tens of billions in OpenAI’s current funding round
• Huang expressed concerns about competition OpenAI faces from Google’s Gemini and Anthropic’s Claude
• OpenAI faces $1.4 trillion in computing commitments across multiple deals, sparking investor worries

Nvidia’s massive $100 billion deal with OpenAI is on ice. The chip giant announced the agreement in September 2024 but talks haven’t moved past early stages.

NVIDIA Corporation, NVDA

CEO Jensen Huang has been telling industry contacts the original deal was never finalized. Sources say he’s raised questions about OpenAI’s business approach and the competition it faces.

The September announcement promised at least 10 gigawatts of computing power for OpenAI. Nvidia would invest up to $100 billion to help OpenAI lease the chips. The stock jumped nearly 4% on the news, pushing Nvidia’s market value toward $4.5 trillion.

But things haven’t gone as planned. The two sides are now rethinking their partnership entirely.

Current discussions focus on a smaller equity investment. Nvidia might put tens of billions into OpenAI’s ongoing funding round instead of the original mega-deal.

Huang has privately criticized what he sees as lack of discipline in how OpenAI runs its business. He’s also worried about the heat OpenAI is facing from competitors.

Competition Heats Up

Google’s Gemini app has been eating into ChatGPT’s growth. OpenAI even declared a code red over the situation.

Anthropic is another threat. Its AI coding tool Claude Code has gained traction in the market. Nvidia committed up to $10 billion to invest in Anthropic back in November.

The competition matters to Nvidia because OpenAI is one of its biggest customers. If OpenAI falls behind, Nvidia’s sales could take a hit.

Both Google and Amazon Web Services use their own custom chips to train AI models. These chips compete directly with Nvidia’s graphics processing units.

The Money Problem

OpenAI CEO Sam Altman signed a bunch of deals with chip and cloud companies after the Nvidia announcement. Those agreements helped fuel a tech stock rally.

But the numbers got scary fast. Altman said the deals put OpenAI on the hook for $1.4 trillion in computing commitments. That’s over 100 times the revenue OpenAI was generating last year.

Investors got nervous. Some tech stocks tied to OpenAI sold off as questions mounted about how the company would pay for everything.

OpenAI executives say the real number is lower. They point to overlap in some deals and note the commitments stretch over many years.

Still, the company is rushing to line up computing capacity. OpenAI plans to go public by the end of 2026 and needs the infrastructure to support growth.

An Nvidia spokesperson said the company has been OpenAI’s preferred partner for a decade. They look forward to working together going forward.

OpenAI said Nvidia technology has powered its breakthroughs from the start. The company expects Nvidia to remain central as it scales up.

Nvidia CFO Colette Kress told investors in December the company hadn’t completed a final agreement with OpenAI. A November filing warned there was no guarantee any investment would happen at all.

Amazon is reportedly in talks to invest up to $50 billion in OpenAI. The ChatGPT maker is trying to raise $100 billion total at an $830 billion valuation.

Huang still sees value in supporting OpenAI financially. Sources say he understands the importance of keeping one of Nvidia’s largest customers competitive in the AI race.

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