Nvidia’s stock dipped early on Monday after news broke that its $100 billion investment in OpenAI was facing uncertainty. By 10:19 a.m. ET, shares were down 1.1%. Insiders mentioned concerns about the deal, reported by the Wall Street Journal.
In September, Nvidia announced plans to partner with OpenAI to provide at least 10 gigawatts of computing power, along with that massive investment. However, CEO Jensen Huang had previously indicated that the $100 billion figure was tentative and criticized OpenAI for its strategies. He also voiced concerns over competitors like Alphabet’s Google and Anthropic.
Over the weekend, Huang pushed back on claims of dissatisfaction with OpenAI, calling them “nonsense.” He emphasized Nvidia’s commitment to a significant investment, saying it would likely be their largest ever. Huang praised OpenAI’s work and expressed enthusiasm for collaborating with CEO Sam Altman.
Experts are weighing in on this situation. Sarah Kunst, a managing director at Cleo Capital, expressed concern about the vague commitment. She noted Huang didn’t definitively say it would be $100 billion, instead emphasizing it would be substantial but uncertain. This kind of ambiguity raises questions about investor-startup relationships.
Another expert, Dan Ives from Wedbush, highlighted the issue of “circular financing” in the AI sector. This concept involves big tech firms investing in one another, potentially muddling the financial clarity of these organizations. Ives believes that Nvidia’s cautious approach aims to ensure that its competitors are not advantaged by its investments into OpenAI.
Interestingly, a 2023 study showed that 70% of investors are wary of companies that engage in such circular financing, as it may obscure true financial health. Ives’s analysis suggests Nvidia understands this concern and is positioning itself carefully.
As Nvidia moves forward, its actions will be closely watched. The potential investment in OpenAI carries significant weight—not just for Nvidia and OpenAI, but for the technology landscape as a whole.
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