Nvidia Stock Drops Nearly 3%. Why Its $100 Billion OpenAI Investment Is in Question

Dow Jones02-03 07:32

Nvidia stock fell on Monday amid questions about the chip maker's commitment for a major investment in OpenAI, the developer of ChatGPT.

Nvidia shares ended Monday down 2.9% to $185.61.

The focus is on Nvidia's relationship with OpenAI. A deal for Nvidia to invest as much as $100 billion in the artificial-intelligence company has "stalled" since it was announced in September, The Wall Street Journal reported late Friday, citing people familiar with the matter.

Any suggestion that Nvidia has doubts over the future of OpenAI could have major repercussions for the AI trade as a whole. OpenAI has committed to roughly $1.4 trillion in spending and has major cloud-computing and chip deals with companies including Microsoft, Oracle, CoreWeave, Advanced Micro Devices, and Broadcom.

OpenAI is currently valued at around $500 billion and its executives have said it reached more than $20 billion in annualized revenue last year. CEO Sam Altman has suggested it could reach $100 billion in annual revenue by 2027.

OpenAI is reportedly preparing for a public listing as soon as the fourth quarter of this year and pursuing a fund-raising round of up to $100 billion at a potential valuation of $830 billion ahead of the initial public offering.

Nvidia CEO Jensen Huang has expressed concerns about the competition OpenAI faces from the likes of Google and Anthropic and stressed that the investment agreement is not binding, according to the Journal.

Nvidia's Huang told reporters in Taipei on Saturday that the company would be involved in OpenAI's latest funding round and potentially make its largest investment ever.

"Sam is closing the round and we will absolutely be involved," Huang said. "We will invest a great deal of money, probably the largest investment we've ever made."

That would suggest Nvidia intends to invest more in OpenAI than the $20 billion it reportedly spent to license technology from AI chip start-up Groq, which is the company's biggest single investment so far.

Nvidia is considering putting in up to $30 billion in OpenAI's fund-raising round, the technology-focused news outlet The Information reported previously.

Barron's owner News Corp has a content-licensing partnership with OpenAI.

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Comments

  • Warzypants
    02-03 07:47
    Warzypants
    Hmm, I can't help wondering whether Elon Musk's lawsuit against OpenAI is queering the pitch for this investment. Should Musk prevail, this would hit OpenAI and Microsoft badly and investing in XAI might be a better bet for Nvidia.
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