NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang has indicated that the firm’s latest $30 billion investment in OpenAI "might be the last time" before the AI startup goes public.
At the Morgan Stanley Technology, Media & Telecom Conference in downtown San Francisco on Wednesday, Huang said he doesn’t foresee the possibility of investing $100 billion in OpenAI, a figure previously proposed as part of a large-scale infrastructure deal in September. The reason behind this, he clarified, is OpenAI’s impending IPO.
He also noted that Nvidia’s $10 billion investment in OpenAI competitor, Anthropic, would also probably be its last. NVIDIA had earlier disclosed its intention to invest in Anthropic alongside Microsoft Corporation (NASDAQ:MSFT) in November, reported CNBC.
Marked Shift From Prior Deal
NVIDIA’s latest $30 billion equity investment in OpenAI was a significant pivot from the “non-binding” letter of intent signed in September.
The original plan envisioned a $100 billion investment linked to deploying 10 gigawatts of computing power. Instead, the new $30 billion commitment represents a direct stake in OpenAI's current funding round, which is being raised at a $730 billion pre-money valuation.
OpenAI CEO, Sam Altman, dismissed reports of a rift with Nvidia as "insanity," reassuring investors that his company will remain Nvidia’s "gigantic customer" for the long term.
Altman added that while OpenAI is exploring its own chips, it will continue using a broad mix of hardware, including Nvidia's upcoming Vera Rubin platform.
Critic Pushes Back
Furthermore, OpenAI’s recent $110 billion funding round, which included Amazon.com Inc. (NASDAQ: AMZN), Nvidia, and SoftBank Group Corp. (OTC: SFTBY), was criticized by George Noble, a hedge fund manager and former assistant to legendary Fidelity investor Peter Lynch. Noble referred to the deal structure as “borderline criminal” and predicted it “can’t end well.”
According to him, the arrangement was vendor financing disguised as venture capital, arguing that companies like Amazon and Nvidia invest in OpenAI while the startup commits to spending far larger sums on their services and hardware. "Amazon and Nvidia are essentially paying OpenAI to buy their own products,” he stated.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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