Nvidia’s $30B Investment Replaces $100B OpenAI Deal
Nvidia is nearing the completion of a $30 billion equity investment in OpenAI, which will take the place of a previously announced $100 billion multiyear partnership that did not advance beyond an initial agreement, as reported. The previous arrangement, announced in September of the previous year as a letter of intent, sought to have Nvidia invest in 10 installments of $10 billion over multiple years. In exchange, OpenAI intended to implement up to 10 gigawatts of additional computing capacity and acquire millions of Nvidia’s artificial intelligence processors. The agreement was crafted as a long-term strategic partnership between the foremost AI chip manufacturer and one of its most significant clients. However, the intent never transformed into a formal contract. As of January this year, it is noted that the agreement was essentially on hold due to widespread investor caution regarding artificial intelligence investments. US technology stocks have declined by 17 per cent since the beginning of the year, highlighting worries regarding valuations and the speed of infrastructure investment.
The revised arrangement is structured as a direct equity investment, according to the source, in which Nvidia will invest up to $30 billion in OpenAI in exchange for shares in the company, replacing the earlier staggered investment model that was tied to compute expansion. This investment is a component of a broader funding round anticipated to generate over $100 billion for OpenAI. The round would value OpenAI at $730 billion, not including the new capital being raised. OpenAI is anticipated to allocate a significant portion of the new funding towards enhancing its computing infrastructure, which is heavily dependent on specialized AI chips. The funding will facilitate the expansion of gigawatts of additional compute capacity over time. The funding round also includes other major investors, the source said, with SoftBank in the final stages of negotiations to invest $30 billion, while Amazon could invest up to $50 billion as part of a broader partnership involving the use of OpenAI’s models. Tata signs OpenAI as the first customer for the data centre under the Stargate initiative The breakdown of the previous partnership agreement aligns with OpenAI’s efforts to broaden its hardware supplier network beyond Nvidia.
In October of the previous year, OpenAI revealed a significant partnership with AMD aimed at securing up to six gigawatts of computing capacity through the utilization of AMD’s Instinct MI450 chips. The agreement encompasses warrants for 160 million AMD shares, valued at over $26 billion. According to a source, OpenAI has been investigating alternative chip providers like Cerebras and Groq since 2025. These suppliers are anticipated to manage approximately 10 percent of OpenAI’s inference workload, which pertains to executing trained models rather than developing them. Reports of these moves have sparked speculation regarding tensions between Nvidia chief executive Jensen Huang and OpenAI chief executive Sam Altman.
However, both have publicly denied any friction, with Altman stating that OpenAI hopes to continue being a significant Nvidia customer. OpenAI’s revenue has been closely aligned with its computing capacity, as the company reported annualized revenue exceeding $20 billion earlier this year. It is reported that OpenAI’s access to computing power and its revenue have each approximately tripled on an annual basis, highlighting the crucial importance of specialized AI hardware in the training and operation of large language models like ChatGPT.
