- Nvidia’s $100 billion deal with OpenAI has barely progressed from a letter of intent
- “There is no assurance that we will enter into definitive agreements”
- Long lead times and regular refresh cycles are risky to long-term deals
The $100 billion collaboration between Nvidia and OpenAI has received its fair share of publicity, but the deal is yet to be finalized and it 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 no definitive agreement has been completed yet.
Originally, the plan included deploying millions of Nvidia GPUs over the course of a number of years, resulting in 10GW of data center capacity.
Nvidia’s deal with OpenAI is still a work in progress
“We still haven’t completed a definitive agreement, but we’re working with them,” Kress noted (via Fortune).
“There is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity or other potential investments, or that any investment will be completed on expected 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-lead, non-cancellable orders that could lead to excess inventory if customers scale back. Continual annual architecture releases could also make forecasting demand difficult.
Kress said that the roughly $500 billion of Blackwell and Vera Rubin system demand for 2025-2026 does not include any OpenAI demand relating to the potential deal.
Although Nvidia shares rose around 2.6% following the CFO’s remarks, investor concerns about an ‘AI bubble’ remain – circular deals, where Nvidia invests in startups that then go on to purchase Nvidia chips, make the entire landscape dependent on each other.
This has prompted large institutions like the Bank of England to warn about ‘sharp market corrections’ when this bubble bursts – outlining the potential risks for tech companies tied into long-term agreements.
Speaking about competition, Kress also stressed that Nvidia is “absolutely not” worried about companies like Google making their own TPUs. “Everybody 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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