Nvidia says ‘no assurance’ of deal with OpenAI after $100 billion pact
two months ago Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman stood side by side in San Jose, California, to announce the historic agreement between two leaders in artificial intelligence.
The duo said Nvidia will invest $100 billion over several years, starting in 2026, as OpenAI’s AI supercomputing facilities come online. The timing of the installations and the cost of each data center were not disclosed.
But on Nvidia quarterly financial report On Wednesday, the chipmaker reminded investors that there is a big difference between the announcement and the contract.
“There is no assurance that we will enter into definitive agreements regarding the OpenAI opportunity or other potential investments, or that any investments will be completed on the expected terms,” Nvidia said in the risk factors section of its quarterly report.
Nvidia has been on an investment spree lately, making its ever-expanding cash pile available and financially backing companies that buy its graphics processing units, or GPUs. Nvidia on Wednesday highlighted its commitment to invest $5 billion in addition to the OpenAI arrangement. Intel quarter and this week agreed to invest up to $10 billion in Anthropic.
An OpenAI spokesperson had no comment but noted Huang’s comments on the call, including his description of OpenAI as a “once-in-a-generation company” and his expectation that the investment “will translate into extraordinary returns.”
“There is no guarantee that any investment will be completed on the expected terms,” Nvidia said.
The main difference with OpenAI is the scale of the planned investment and the criteria that must be met for all the money to come in. An initial $10 billion will soon be provided to OpenAI to help the company work toward deploying its first gigawatt of capacity, a source told CNBC at the time of the announcement.
Altman recently said OpenAI will finish the year with an annualized revenue rate of $20 billion; This is a huge number considering that the flagship ChatGPT product is only three years old. The company expects to reach hundreds of billions of dollars in revenue by 2030, Altman said. However, this figure does not come close to covering the company’s expenses.
OpenAI announced that it will spend approximately $1.4 trillion in total infrastructure spending with a number of partners to continue developing its artificial intelligence models and services. The company depends on outside capital to get there.
Despite the uncertainty of the September deal, Nvidia executives remain optimistic about the company’s work with OpenAI. On Nvidia’s earnings call, CFO Colette Kress touted OpenAI’s growth after the chipmaker reported solid revenue and earnings rising along with stronger-than-expected guidance.
“OpenAI recently shared that its weekly user base has grown to 800 million, its enterprise customers have grown to 1 million, and gross margins are healthy,” Kress said. he said. He added that the two companies are “working on a strategic partnership” and that Nvidia is “focused on helping them build and deploy at least 10 gigawatts of AI data centers.”
And Huang said: “Everything OpenAI does works on Nvidia today.”
An OpenAI spokesperson had no comment but noted Huang’s commentary on the call, including his description of OpenAI as a “once-in-a-generation company” and his expectation that the investment “will translate into extraordinary returns.”
There’s no doubt that OpenAI will continue to spend money on Nvidia chips as it builds data centers. But OpenAI has also partnered with Nvidia’s rival Advanced Micro Deviceslast month it agreed to deploy 6 gigawatts of AMD Instinct GPUs over multiple years and across multiple generations of hardware, starting in the second half of next year.
There’s a critical component to the AMD deal that Nvidia is missing: signatures.
As part of the deal, the company issued a warrant to OpenAI for up to 160 million shares of the chipmaker’s common stock; The qualifying stages were based on distribution volume and AMD’s share price. That agreement was as follows signed By AMD CFO Jean Hu and OpenAI CFO Sarah Friar on October 5.
— CNBC’s MacKenzie Sigalos and Ashley Capoot contributed to this report.
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