Jensen Huang is privately very worried; has the “tens of billions of dollars mega deal” between Nvidia and OpenAI stalled?
Nvidia and OpenAI’s high-profile $100 billion investment agreement announced last September has stalled.
On January 30th, according to sources cited by The Wall Street Journal, the massive deal that Nvidia planned to use to help OpenAI train and run its latest AI models has not advanced due to internal doubts within Nvidia regarding the terms of the deal.
Reports indicate that Nvidia CEO Jensen Huang has privately emphasized to industry insiders over the past few months that the initial $100 billion agreement was non-binding and not finalized. He has also privately criticized OpenAI’s lack of business discipline and expressed concerns about the pressure it faces from competitors like Google and Anthropic.
The shelving of this deal is a setback for OpenAI. The maker of ChatGPT is preparing for an IPO by the end of 2026 and has been working over the past year to secure large amounts of computing power to support future products and growth.
Both sides are currently reconsidering their partnership, with recent discussions including a potential equity investment of tens of billions of dollars in OpenAI’s current funding round.
Negotiations Remain in Early Stages
The two companies announced this massive deal last September at Nvidia’s headquarters in Santa Clara, California.
According to the memorandum of understanding, Nvidia would provide OpenAI with at least 10 GW of computing power and agreed to invest up to $100 billion to help OpenAI pay related costs. As part of the deal, OpenAI agreed to lease chips from Nvidia.
According to sources, OpenAI originally expected the negotiations to be completed within weeks. However, talks remain in early stages and have not made substantive progress.
In a November filing, Nvidia stated that it could not guarantee the company would “enter into definitive agreements regarding the OpenAI opportunity or other potential investments, or that any investments would be completed under the anticipated terms.”
Nvidia Chief Financial Officer Colette Kress said at a UBS conference in Scottsdale, Arizona, last December that the company had not yet finalized an agreement with OpenAI.
Competitive Pressure Raises Concerns
According to sources, Jensen Huang’s concerns about OpenAI’s business model partly stem from the intense competition it faces.
Recent concerns have mainly come from the success of Google’s Gemini application, which slowed ChatGPT’s growth and prompted OpenAI to briefly declare a “red alert.” Anthropic has also exerted pressure on OpenAI with its popular AI coding assistant, Claude Code.
This competitive landscape directly relates to Nvidia’s core interests.
Reports say Huang has told industry insiders that he still believes providing financial support to OpenAI in some form is essential, partly because OpenAI is one of the largest customers for chip designers. If OpenAI falls behind other AI developers, it could affect Nvidia’s sales.
Anthropic relies heavily on Amazon Web Services’ Trainium chips and Google’s proprietary TPU processors to train AI models. In November, Nvidia said it had committed up to $10 billion in investment to Anthropic.
Google mainly uses TPU to train Gemini. Both chips pose major competitive threats to Nvidia’s best-selling graphics processing units (GPUs).
Huge Commitments Raise Market Concerns
When the deal was first announced, Huang, Altman, and OpenAI president Greg Brockman called it “the largest computing project in history” in a joint statement.
As part of the deal, Nvidia discussed providing collateral for loans OpenAI planned to obtain to build its own data centers. After news of the deal broke, Nvidia’s stock rose nearly 4%, pushing its market value up to about $4.5 trillion.
OpenAI later signed agreements with a string of chip and cloud computing companies, driving up global stock markets. But investors later became uneasy about the startup’s ability to pay for these deals, triggering a selloff in some tech stocks related to OpenAI.
Altman said these deals saddled the company with $1.4 trillion in computing commitments, more than 100 times its projected revenue for last year. OpenAI executives said that after deducting some overlap in the deals, the total amount committed is lower, and that these agreements will be fulfilled over a long period.
An OpenAI spokesperson said:
Our team is actively working on partnership details. From the beginning, Nvidia technology has powered our breakthroughs, is powering our current systems, and will continue to be central as we scale our future business.
A Nvidia spokesperson said that Nvidia has been OpenAI’s preferred partner for the past decade and looks forward to continuing cooperation with the company.
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