TLDR
- Nvidia’s $100 billion investment deal with OpenAI remains unfinalized, with CFO Colette Kress confirming negotiations are ongoing
- The proposed agreement involves deploying at least 10 gigawatts of Nvidia systems for OpenAI’s operations
- Any finalized OpenAI deal would be additional to Nvidia’s existing $500 billion in chip bookings through 2026
- Nvidia shares rose 2.6% following Kress’s comments at the UBS Global Technology and AI Conference
- The chipmaker faces scrutiny over circular deal structures after also committing up to $10 billion to OpenAI rival Anthropic
Nvidia’s massive investment framework with OpenAI is not yet complete. CFO Colette Kress made this clear at the UBS Global Technology and AI Conference in Arizona on Tuesday.
The chipmaker announced a letter of intent in September to invest up to $100 billion in the ChatGPT parent company. Three months later, the terms remain in discussion.
“We still haven’t completed a definitive agreement, but we’re working with them,” Kress told conference attendees. She addressed growing questions about the partnership between two major players in the AI race.
The proposed deal centers on a massive deployment of computing power. Nvidia would provide at least 10 gigawatts of systems to OpenAI. That’s enough capacity to power more than 8 million U.S. homes.
OpenAI has been a major customer for Nvidia’s chips since the generative AI boom started in late 2022. The startup joins large cloud providers as key buyers of the chipmaker’s products.
Bookings Could Grow Beyond Current Projections
Nvidia CEO Jensen Huang previously disclosed $500 billion in bookings for advanced chips through 2026. Kress clarified that figure doesn’t account for the pending OpenAI agreement.
“That half a trillion doesn’t include any of the work that we’re doing right now on the next part of the agreement with OpenAI,” she explained. Any chips delivered under a finalized OpenAI deal would come on top of existing orders.
The stock market responded favorably to the update. Nvidia shares climbed 2.6% on Tuesday following Kress’s remarks.
The financial implications extend beyond just the OpenAI deal. Kress noted that Nvidia’s recent commitment of up to $10 billion to Anthropic could also expand the company’s chip bookings. Anthropic competes directly with OpenAI in the AI assistant market.
Wall Street Watching Deal Structures
These investments have drawn attention from Wall Street analysts. The concern centers on circular deal structures where Nvidia invests in companies that then purchase Nvidia hardware.
Over the past year, Nvidia has struck multiple deals with AI startups. Many of these firms are also major customers for its chips. This pattern has fueled broader questions about valuations in the AI sector.
The chipmaker’s investment strategy reflects the tight relationship between funding AI development and selling the hardware that powers it. OpenAI needs Nvidia’s advanced chips to train and run its AI models. Nvidia needs customers who can afford to buy chips at scale.
The 10 gigawatt deployment outlined in the letter of intent would represent one of the largest computing infrastructure projects in AI history. The actual number of chips involved would depend on the specific systems Nvidia provides and when they’re delivered.
Kress did not provide a timeline for finalizing the OpenAI agreement. She emphasized that negotiations are ongoing and both companies are working toward completion.
Nvidia shares have been volatile as investors weigh the company’s growth prospects against concerns about AI spending sustainability. The stock remains up substantially over the past two years as demand for AI chips has surged.
The Anthropic commitment adds another layer to Nvidia’s investment portfolio. The company now has pending deals with two competing AI labs, both requiring massive amounts of computing power.
Kress’s comments at the conference provided the clearest update yet on the status of the OpenAI deal since the September announcement. Investors had been waiting for details on when the agreement might be finalized and how it would affect Nvidia’s order book.
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