Nvidia nears $20b investment in OpenAI: sources

Nvidia is close to finalizing a US$20 billion investment in OpenAI as part of its upcoming funding round, according to sources familiar with the matter.

The deal is not yet complete, and terms may change.

OpenAI aims to raise up to US$100 billion, with potential contributions from firms including Amazon and SoftBank, which have discussed investments of up to US$50 billion and US$30 billion, respectively.

Nvidia and OpenAI have been key players in the AI industry, but recent reports suggest tensions between the two companies.

Despite this, both CEOs have publicly affirmed their commitment to collaboration, with Nvidia’s Jensen Huang stating the firm plans to join the next funding round, describing it as potentially Nvidia’s largest investment ever.

🔗 Source: Bloomberg

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Implications, context, and why it matters.

The prospective investment would reset a previous “up to $100 billion” framework

The proposed investment would scale back an earlier, more ambitious plan discussed by Nvidia and OpenAI.
Nvidia and OpenAI previously signed a non-binding letter of intent in which Nvidia said it planned to invest up to $100 billion to support OpenAI’s AI infrastructure buildout 1.
That larger proposal reportedly slowed after internal Nvidia worries about the project’s size and questions about OpenAI’s business discipline 1.
Nvidia CEO Jensen Huang later said the $100 billion figure was “never a commitment” and added that any investment would be assessed in stages, “one step at a time” 1.

This deal’s structure could draw more regulator attention to Nvidia

The arrangement raises debate over “circular” funding, where a supplier funds customers who then buy its products, such as Nvidia backing AI developers that purchase Nvidia’s GPUs (graphics processing units), the chips widely used to train and run AI models 1.
Supporters see the approach as a way to steady demand for GPUs, while critics raise conflict and competition concerns 1.
The Department of Justice has previously opened an investigation into possible antitrust violations tied to Nvidia’s AI-chip market dominance; one analysis puts Nvidia’s share between 70% and 95% of the AI chip market 2.
A prominent OpenAI tie-up could increase questions about whether Nvidia uses equity stakes to lock in its market position.