Announcement

Nvidia announced plans to invest up to $100B in OpenAI as part of a major partnership to build AI infrastructure.

Context

OpenAI, the company behind ChatGPT, has grown to over 700M weekly active users since launching its popular AI chatbot. The company has faced computing limitations in meeting customer demand, particularly when releasing new products. Nvidia has dominated the AI chip market, with its processors powering most of the world's advanced AI systems.

Partnership

Nvidia and OpenAI announced a strategic partnership on Monday that included Nvidia's investment of up to $100B in the AI startup.

The companies signed a letter of intent to build data centers containing Nvidia chips that would collectively consume 10 gigawatts of electricity, roughly equivalent to the power produced by more than four Hoover Dams. Nvidia will invest in OpenAI progressively as each gigawatt of computing power is deployed, receiving equity in OpenAI in exchange. The investment will be made in cash, with the first $10B coming when the initial gigawatt of computing power comes online. The companies said they plan to finalize partnership details in the coming weeks.

Timeline

The first phase of the infrastructure buildout is targeted to come online in the second half of 2026, using Nvidia’s next-generation Vera Rubin chip platform. “Everything starts with compute,” OpenAI CEO Sam Altman said in a statement. “Compute infrastructure will be the basis for the economy of the future, and we will utilize what we're building with Nvidia to both create new AI breakthroughs and empower people and businesses with them at scale.”

Market Impact

Nvidia shares rose as much as 4% following the announcement, bringing the company's gains to about 36% for the year.

The partnership comes days after Nvidia committed $5B to struggling chipmaker Intel and follows OpenAI's involvement in the recently announced $500B Stargate AI data center project with Microsoft, Oracle, and SoftBank.