Nvidia halts plan to invest $100 billion in OpenAI after talks collapse

The discussions stalled after some inside Nvidia expressed concerns about the transaction, the Wall Street Journal said, citing unidentified people familiar with the deliberations

By Nick Turner

  Nvidia Corp.’s negotiations to invest as much as $100 billion in OpenAI have broken down, the Wall Street Journal reported, exposing a potential rift between two of the most powerful companies in the artificial intelligence industry. 

The discussions stalled after some inside Nvidia expressed concerns about the transaction, the Journal said, citing unidentified people familiar with the deliberations. OpenAI makes the popular chatbot ChatGPT, while Nvidia dominates the market for AI processors that help develop such software.

 

The companies announced the agreement in September, saying at the time that they had signed a letter of intent for a strategic deal. The $100 billion was meant to support new data centres and other AI infrastructure, built with Nvidia components. They were aiming for 10 gigawatts’ worth of computing power — equivalent to the peak electricity demand of New York City.

 

In a statement to Bloomberg News on Friday, Nvidia said, “We have been OpenAI’s preferred partner for the last 10 years. We look forward to continuing to work together.” The company didn’t discuss the state of negotiations.

 

A representative for OpenAI didn’t immediately respond to a request for comment.

 

The two sides are now rethinking the partnership, the Journal said. In one scenario, Nvidia may invest tens of billions of dollars as part of OpenAI’s current funding round, according to the newspaper.

 

OpenAI has been seeking to raise as much as $100 billion in that round. Amazon.com Inc. is in talks to invest as much as $50 billion and expand an agreement that involves selling computer power to the AI startup, Bloomberg reported Thursday.

 

Nvidia has made other high-profile investments in AI companies. Earlier this week, it announced plans to put an additional $2 billion into CoreWeave Inc., a cloud computing provider that’s also a customer. 

 

These sorts of circular deals — where a company invests in a business that buys its product — have fueled concern about the sustainability of the AI boom. Nvidia Chief Executive Officer Jensen Huang has brushed off the criticism.

 

After the CoreWeave deal, he said that such investments represent a small portion of the total amount that companies will need to raise. “So the idea that it is circular is — it’s ridiculous,” he said.