The once-hyped $100 billion artificial intelligence pact between OpenAI and Nvidia appears to be on uncertain ground, raising questions among investors about the future of this critical partnership and the broader AI landscape. While both companies have publicly downplayed any friction, recent reports suggest significant hurdles and diverging strategies.
The ambitious deal, announced with much fanfare in September, aimed to solidify OpenAI’s access to Nvidia’s cutting-edge AI chips, a move deemed essential for the AI leader’s aggressive growth targets. However, five months later, no definitive contract has been signed, and no funds have been exchanged. This stagnation has fueled speculation, with The Wall Street Journal reporting that negotiations have been “on ice” due to internal doubts within Nvidia concerning OpenAI’s long-term business viability. These concerns were subtly foreshadowed in Nvidia’s quarterly filings in November, which stated there was “no assurance” of finalizing agreements with OpenAI.
Despite the reported discord, the symbiotic relationship between Nvidia and OpenAI remains indispensable for both entities. OpenAI’s insatiable appetite for high-performance computing power, primarily driven by Nvidia’s Graphics Processing Units (GPUs), is crucial for developing and deploying its advanced AI models. Conversely, Nvidia relies on prominent customers like OpenAI to showcase the transformative capabilities of its costly hardware, thereby driving demand and justifying its significant market capitalization, which has recently hovered around $4.4 trillion, down from a peak of over $5 trillion. OpenAI, meanwhile, continues to pursue aggressive funding rounds, with its private market valuation reportedly surging towards $800 billion.
Jensen Huang, Nvidia’s CEO, has publicly expressed confidence in Sam Altman, his counterpart at OpenAI, stating, “We are looking forward to Sam closing it and he’s doing terrifically.” He added that Nvidia intends to invest in OpenAI’s upcoming funding rounds and potentially participate in its initial public offering. This sentiment was echoed by Altman, who, in a post on X, described the partnership as “foundational” and expressed his company’s desire to be a “gigantic customer for a very long time,” dismissing the current “insanity” surrounding the deal’s status.
The reported stalemate stems from the increasing diversification strategies of both tech giants. Nvidia, seeking to mitigate customer concentration risk and expand its ecosystem, has made substantial investments in other AI players, including a $10 billion commitment to Anthropic in November. This move, while strategically sound for Nvidia, potentially creates a competitive dynamic with OpenAI.
Simultaneously, OpenAI, facing an unprecedented demand for computing resources that even Nvidia cannot singly satisfy, has been actively forging partnerships with other semiconductor companies. This includes collaborations with Advanced Micro Devices (AMD) to develop next-generation AI chips and a significant deal with Broadcom for custom AI chip development. Furthermore, OpenAI has announced a $10 billion agreement with startup Cerebras for specialized AI hardware. These strategic alliances, while necessary for OpenAI’s scaling, could be perceived as a lack of exclusive commitment by Nvidia.
The historical ties between the two companies run deep. OpenAI was an early adopter of Nvidia’s DGX AI system in 2016. Over the years, OpenAI became a major consumer of Nvidia GPUs, often through Microsoft’s cloud infrastructure. The explosive growth of ChatGPT, released in late 2022, directly correlated with Nvidia’s revenue surge, from $6 billion in the quarter of its release to nearly $57 billion in the period ending October. This underscores Nvidia’s dominant position in the AI GPU market, estimated at over 90%.
While both companies publicly reaffirm their commitment, the practicalities of such a monumental deal, involving the construction of power infrastructure and the deployment of billions of dollars, are complex. The initial phase of the $100 billion agreement was slated to come online in the latter half of 2026, with Nvidia’s first $10 billion investment contingent on the completion of the first gigawatt of power capacity. The ongoing fundraising efforts by OpenAI are separate from this initial agreement, signaling a continuous need for capital and strategic partnerships.
The intricate dance between these AI titans highlights the evolving dynamics of the artificial intelligence industry. As demand for compute power intensifies, companies are forced to balance strategic alliances with the pursuit of competitive advantages, creating a landscape of both immense opportunity and potential volatility.
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