The Wall Street Journal reported on Friday evening that Nvidia’s ambitious plan to invest up to $100 billion in OpenAI has hit significant roadblocks. Sources familiar with the matter revealed that internal doubts among Nvidia executives regarding the deal have caused a stall in negotiations.
In September, the two companies had announced a non-binding letter of intent, which laid the groundwork for OpenAI to lease chips from Nvidia in a venture that aimed to build out 10 gigawatts of computing power. This collaboration would have seen Nvidia gradually investing in OpenAI as each gigawatt was deployed. However, this weekend, Nvidia’s CEO, Jensen Huang, clarified to the press that the $100 billion figure was “never a commitment,” aligning with the WSJ’s observations about the stalled negotiations.
The report also suggested that Huang had voiced concerns about OpenAI’s approach to business, describing it as lacking discipline. Additionally, he highlighted competition posed by rivals such as Google and Anthropic as worries that further complicated the potential partnership.
These revelations underscore Nvidia’s desire to maintain its independence and avoid being overly reliant on OpenAI, especially given the market’s sensitivity to companies that appear too dependent on their future success. Nvidia’s caution reflects a broader trend where tech firms linked too closely with OpenAI, such as Microsoft, have experienced significant stock declines, and Oracle has seen its credit default swap spreads widen dramatically.
Despite the current uncertainties, Huang stated that Nvidia would still “absolutely be involved” in OpenAI’s upcoming funding round, promising that it might be “probably the largest investment we’ve ever made.” This investment would come on the heels of Nvidia’s notable support for various facets of the AI supply chain, bolstered by robust cash flows and ongoing buybacks.
The partnership between Nvidia and OpenAI, initially seen as a groundbreaking alliance, appears to be struggling to make tangible progress. While both companies had expressed intentions to finalize details “in the coming weeks” back in September, the lack of recent developments has been notable, with no actionable plans emerging as of February.
Interestingly, Nvidia’s remarks concerning the $100 billion investment have shifted over time. Recent financial disclosures and statements from CFO Colette Kress have shown reluctance to confirm that grand figure, instead referring to it merely as an “opportunity” for potential investment. In contrast, the company formally pledged $10 billion to Anthropic and explicitly documented the inherent uncertainties in pursuing arrangements with OpenAI.
In summary, while Nvidia is still interested in engaging with OpenAI and potentially making substantial investments, the path forward is fraught with internal skepticism and external pressures that have caused the once-promising collaboration to stall.
