Nvidia’s ambitious $100 billion deal with OpenAI has encountered significant roadblocks, casting doubt on the chip giant’s plans to strengthen its partnership with the AI pioneer. Originally announced in September 2024, the monumental investment aimed to provide OpenAI with at least 10 gigawatts of computing power, but recent internal discussions at Nvidia indicate a departure from those lofty goals.
CEO Jensen Huang has expressed skepticism regarding the deal’s viability, describing it as nonbinding and offering private critiques of OpenAI’s operational strategies. Industry contacts suggest that Nvidia is now pivoting toward a smaller equity investment worth tens of billions, rather than committing to the original mega-deal.
This change in approach comes as OpenAI grapples with mounting competition from tech heavyweights like Google and Anthropic. With Google’s Gemini app encroaching on ChatGPT’s market share, OpenAI has had to declare a code red, reflecting the urgency of their competitive position. Huang’s concerns about OpenAI’s ability to compete effectively in a market increasingly dominated by well-resourced rivals are not unfounded. Google and Amazon Web Services are leveraging their custom chips for AI training, which directly threaten Nvidia’s graphics processing units.
OpenAI’s Financial Commitments Raise Eyebrows
OpenAI faces an overwhelming financial landscape, having committed to an astonishing $1.4 trillion in computing obligations across various deals. This staggering figure dwarfs the revenue generated by the company last year by more than a hundredfold, raising alarm bells among investors. Concerns have been exacerbated by the realization that this massive financial commitment may hinder OpenAI’s ability to sustain growth, particularly leading up to its anticipated IPO in late 2026.
Yet, OpenAI executives maintain that the actual liabilities are exaggerated, citing overlaps between agreements and projecting that these commitments will be fulfilled over several years. Nevertheless, the escalating uncertainty has led to sell-offs in tech stocks associated with OpenAI as apprehensions mount over the company’s financial stability.
Despite the challenges, Nvidia remains a crucial partner for OpenAI, having historically supported the AI company with cutting-edge technology essential for its advancements. Huang recognizes the importance of sustaining OpenAI’s competitive edge, particularly as the two companies explore revised terms for collaboration.
Reports indicate that Amazon is also in discussions to pump up to $50 billion into OpenAI, as the funding saga continues to unfold. OpenAI is striving to secure a total of $100 billion in its current funding round while seeking a valuation of $830 billion, a feat that would illustrate significant investor confidence.
The atmosphere surrounding the Nvidia-OpenAI partnership is indicative of the volatile nature of the burgeoning AI sector, where alliances and investments can shift rapidly in response to market realities. While Huang has signaled that Nvidia aims to remain an ally to OpenAI, the challenges ahead underscore the intricate balance of competition and collaboration in the age of AI.
