- Nvidia’s $100 billion deal with OpenAI has barely progressed since a letter of intent
- “There is no guarantee that we will reach definitive agreements”
- Long delivery times and regular refresh cycles are risky for long-term transactions
The $100 billion collaboration between Nvidia and OpenAI has received its share of publicity, but the deal is not yet finalized and so far only a simple letter of intent remains.
Colette Kress, Nvidia’s chief financial officer, confirmed at the UBS Global Technology and AI conference that no final agreement has been reached yet.
Originally, the plan called for deploying millions of Nvidia GPUs over several years, resulting in 10 GW of data center capacity.
Nvidia’s deal with OpenAI is still ongoing
“We don’t have a final agreement yet, but we’re working with them,” Kress noted (via Fortune).
“There can be no assurance that we will enter into definitive agreements regarding the OpenAI opportunity or other potential investments, or that any investments will be made on the anticipated 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-term and non-cancelable orders that could lead to excess inventory if customers scale back business. Continuous annual architecture releases could also make forecasting demand difficult.
Kress said the roughly $500 billion request for the Blackwell and Vera Rubin systems for 2025-2026 does not include any OpenAI requests related to the potential deal.
Although Nvidia shares rose about 2.6% following the CFO’s remarks, investor concerns about an “AI bubble” remain: Circular deals, in which Nvidia invests in startups that then buy Nvidia chips, make the entire landscape dependent on each other.
This has prompted major institutions like the Bank of England to warn of “sharp market corrections” when this bubble bursts – highlighting the potential risks for tech companies tied up in long-term deals.
Speaking of competition, Kress also pointed out that Nvidia is “absolutely not worried” about companies like Google making their own TPUs. “Everyone is on our platform,” she noted, suggesting that it would take a long time for the industry to move away from Nvidia hardware.
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