Chipmaker Nvidia (NVDA.O) is set to invest up to $100 billion in ChatGPT-parent OpenAI, signing a letter of intent for a strategic partnership to deploy at least 10 gigawatts of compute, the companies said on Monday.
Nvidia has used its financial clout to keep its hardware central to the buildout of artificial intelligence systems. Keeping OpenAI, which is also exploring its own chip designs, as a key customer could help the company reinforce its dominance as the industry considers rival suppliers.
Here are some analyst reactions to the partnership:
MATT BRITZMAN, SENIOR EQUITY ANALYST, HARGREAVES LANSDOWN
"For Nvidia, the prize is huge — every gigawatt of AI data centre capacity is worth about $50 billion in revenue, meaning this project could be worth as much as $500 billion.
By locking in OpenAI as a strategic partner and co-optimizing hardware and software roadmaps, Nvidia is ensuring its GPUs remain the backbone of next-gen AI infrastructure.
The market is clearly big enough for multiple players, but this deal underscores that, when it comes to scale and ecosystem depth, Nvidia is still setting the pace — and raising the stakes for everyone else."
JACOB BOURNE, TECHNOLOGY ANALYST, EMARKETER
"Demand for Nvidia GPUs is effectively baked into the development of frontier AI models, and deals like this should also ease concerns about lost sales in China.
It also throws cold water on the idea that rival chipmakers or in-house silicon from the Big Tech platforms are anywhere close to disrupting Nvidia's lead.
For OpenAI, it signals greater independence as it continues diversifying away from its Microsoft partnership and races to develop its next-generation models."
ANSHEL SAG, PRINCIPAL ANALYST, MOOR INSIGHTS & STRATEGY
"I think this strengthens the partnership between the two companies that has existed since the beginning of OpenAI's existence. This also validates Nvidia's long-term growth numbers with so much volume and compute capacity, also enabling OpenAI to scale to even bigger customers."
BEN BAJARIN, CEO OF TECHNOLOGY CONSULTING FIRM CREATIVE STRATEGIES
"Really the point Nvidia was making was that it's just enabling OpenAI to meet surging demand and, at this point, we know there's surging demand for Nvidia GPUs, because that's primarily what OpenAI runs on."
KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL
"This sounds like Nvidia is investing in its largest customer. These arrangements can be beneficial for both parties. But there can be dangers as well. Being totally linked with each other can cause for short-sightedness and can make an entry point for other chip competitors to come into other AI companies and woo them.
We are not sold on the model of LLM as being the technology that will create vast amounts of productivity that everyone expects."
GIL LURIA, ANALYST AT D.A. DAVIDSON
"While the announcement is positive for OpenAI's ability to ramp, we are concerned Nvidia has become the 'investor of last resort,' bailing out OpenAI's overextended commitments."
DAVID WAGNER, PORTFOLIO MANAGER AT APTUS CAPITAL ADVISORS
"Nvidia continues to double-down on AI as we always figured that CEO Jensen Huang would want to invest downward into AI factories - this announcement is much earlier than many would have expected."
STACY RASGON, ANALYST AT BERNSTEIN
"On the one hand, this helps OpenAI deliver on what are some very aspirational goals for compute infrastructure, and helps Nvidia ensure that stuff gets built. On the other hand the 'circular' concerns have been raised in the past, and this will fuel them further."
