Nvidia Pays OpenAI to Buy Its Chips

OpenAI loves to make grand announcements. Earlier this year we had the hoopla about its Stargate data center venture, worth up to $500 billion. Today the ChatGPT creator announced a letter of intent to form a strategic partnership with Nvidia to “build and deploy” artificial intelligence data centers holding “millions” of Nvidia’s AI chips. To help pay for this, Nvidia will invest up to $100 billion in OpenAI. Nvidia must be pretty anxious about competition to be paying customers to buy its chips!

It’s no secret that Nvidia’s monster AI chip business has drawn in lots of potential rivals, from startups like Groq to big firms like Google. So far, the sheer quality of Nvidia’s chips has maintained its edge. But as we’ve reported, here and here, Google is starting to make inroads. Perhaps it's no coincidence, then, that Nvidia is increasingly giving its customers money, as it did with Lambda recently and CoreWeave earlier this year. Those were relatively small deals, and a way of seeding the landscape with newer cloud firms. But this $100 billion deal with an existing user of its chips gives a whole new dimension to the round-trip concept.