Nvidia to invest $100 billion in OpenAI for massive AI data center expansion

Nvidia will invest $100 billion in OpenAI to support new data centers and other artificial intelligence infrastructure.

This massive agreement demonstrates the rapidly growing demand for AI tools like ChatGPT and the computing power required to run them.

The companies announced the deal on Monday, stating they had signed a letter of intent for a strategic agreement. The investment aims to help OpenAI build data centers with a capacity of at least 10 gigawatts.

These data centers will be equipped with Nvidia’s advanced chips to train and implement artificial intelligence models.

According to sources close to the matter who spoke to Bloomberg, the money will be provided in stages, with the first $10 billion to be paid upon signing the agreement.

Nvidia is making the investment in cash and will receive OpenAI shares as part of the deal. Additional increments will be provided as each gigawatt of computing power is deployed.

Following the collaboration, Nvidia shares gained 3.9% on the New York Stock Exchange. The stock has appreciated by approximately 37% this year, solidifying the company’s position as the world’s most valuable corporation.

OpenAI, meanwhile, is the world’s largest technology startup. Bloomberg reported last month that initial talks were held for a share sale that valued the company at $500 billion.

The companies are leading a global initiative to build data centers for the next generation of AI tools, a venture expected to cost trillions of dollars in total. This initiative requires advanced chips, servers, cooling systems, and an immense amount of electricity.

The scope of the Nvidia-OpenAI initiative will be particularly large, as 10 gigawatts is equivalent to the peak electricity demand of New York City.

“This investment and infrastructure partnership marks the next leap forward, providing 10 gigawatts of power for the next generation of intelligence,” Nvidia CEO Jensen Huang said in a statement.

OpenAI CEO Sam Altman also stated that the Nvidia deal would provide the necessary computing power, leading to new AI breakthroughs. “It all starts with compute. Computing infrastructure will be the foundation of the future economy,” Altman said.

ChatGPT is used by approximately 700 million people weekly and requires intensive computing power to deliver and develop its products.

In the past, the company has faced computational constraints in meeting customer demand, especially for new versions.

On Sunday, Altman announced on social media that his company would be releasing some new “compute-intensive” products in the next few weeks.

Nvidia is using its financial strength to ensure its technology remains at the center of AI systems. With the OpenAI deal, it is strengthening ties with a vital ally.

The startup produces the market-leading chatbot and is working to expand its own AI infrastructure.

The agreement indicates that OpenAI will remain a significant customer for Nvidia, even as it seeks other suppliers.

Nvidia and OpenAI have not provided details about the investment in OpenAI or when it will take place.

In announcing the deal, the companies stated they “look forward to finalizing the details of this new phase of strategic partnership in the coming weeks.”

According to Huang, the project will involve 5 million of Nvidia’s chips, a figure equal to the total number of chips the company will sell this year. In an interview with CNBC, he described it as a “massive project.”