- Nvidia’s $100 billion deal with OpenAI has barely advanced from a letter of intent
- “There is no certainty that we will enter into final agreements”
- Long lead times and regular update cycles are risky for long-term deals
The $100 billion collaboration between Nvidia and OpenAI has received its fair share of publicity, but the deal is far from finalized and remains little more than a letter of intent to this day.
Nvidia CFO Colette Kress confirmed at the UBS Global Technology and AI Conference that a final deal has not yet been reached.
Originally, the plan included deploying millions of Nvidia GPUs over a number of years, resulting in 10GW of data center capacity.
Nvidia’s deal with OpenAI is still ongoing
“We still haven’t finalized a final deal, but we’re working with them,” Kress noted (via Assets).
“There can be no assurance that we will enter into definitive agreements with respect to the OpenAI option or other potential investments, or that any investment will be completed on anticipated terms, if at all,” Nvidia wrote in a 10-Q filing.
The company also highlighted risk factors associated with long-term partnerships, such as long-standing, non-cancelable orders that could lead to excess inventory if customers scale back. Continuous annual architecture releases can also make it difficult to predict demand.
Kress said the Blackwell and Vera Rubin system demand of about $500 billion for 2025-2026 does not include any OpenAI demand related to the potential deal.
Although Nvidia shares rose about 2.6% after the CFO’s remarks, investor concerns about an ‘AI bubble’ remain – circular deals where Nvidia invests in startups that then go on to buy Nvidia chips make the entire landscape interdependent.
This has led major institutions such as the Bank of England to warn of ‘sharp market corrections’ when this bubble bursts – outlining the potential risks for technology companies tied to long-term deals.
Speaking of competition, Kress also emphasized that Nvidia is “absolutely not” worried about companies like Google making their own TPUs. “Everyone is on our platform,” she noted, suggesting it would take a long time for the industry to shift away from Nvidia hardware.
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