Historic investment
Nvidia has pledged up to $100 billion to OpenAI, marking the largest private investment in the tech sector’s history. The deal cements CEO Jensen Huang’s ambition to position the $4.3 trillion chipmaker at the center of the global AI boom. Analysts say the investment could generate hundreds of billions in revenue for Nvidia, even as uncertainties remain over construction timelines and energy supply.
Strategic implications
The agreement designates Nvidia as OpenAI’s “preferred strategic compute and networking partner.” It includes building at least 10 gigawatts of AI data centers, dubbed “AI factories” by Huang, capable of consuming as much power annually as 10 million U.S. households. The deal builds on a long relationship between the two companies that began in 2016 when Nvidia delivered its first AI supercomputer to OpenAI. Huang and OpenAI CEO Sam Altman finalized the agreement directly during President Donald Trump’s recent state visit to the UK.
Market dynamics
Nvidia’s shares have soared nearly 1,000% since ChatGPT’s launch in 2022, fueled by soaring demand for GPUs. The deal comes as OpenAI pursues massive infrastructure projects, including its $400 billion Stargate venture with SoftBank and Oracle. Morgan Stanley estimates that deploying 10 gigawatts of computing power could cost $600 billion, with as much as $350 billion flowing to Nvidia. However, OpenAI has also signed a deal with Broadcom to diversify its semiconductor supply, signaling competitive pressure.
Industry challenges
Despite the scale of Nvidia’s backing, questions persist about AI’s financial sustainability. Bain estimates AI companies will need $500 billion in annual capital investment by 2030, requiring $2 trillion in revenues — a target the industry may miss by $800 billion. Even so, with over 700 million weekly ChatGPT users, OpenAI’s compute demand is surging. Altman has described infrastructure as the key constraint on innovation, while Nvidia’s Cuda software ecosystem keeps developers tied to its chips, strengthening its grip on the AI landscape.