NVIDIA and OpenAI's $100 billion investment agreement may have been discounted by 70%.
According to a report by the Financial Times on Friday, NVIDIA is about to finalize a $30 billion equity investment in OpenAI as part of a large-scale financing round for the artificial intelligence startup, marking a shift in the relationship from a complex long-term commitment to a more direct capital arrangement. The report cites informed sources stating that NVIDIA is in the final stages of negotiations with OpenAI, and the investment could be completed as early as this weekend.
According to a previous article from Wall Street Insight, the initial $100 billion deal stalled due to internal doubts at NVIDIA regarding the terms of the deal, with Jensen Huang privately emphasizing to industry insiders in recent months that the agreement is non-binding and not finalized.
This $30 billion equity investment is part of OpenAI's larger financing plan. According to informed sources, this financing round is expected to raise over $100 billion, which would value OpenAI at $730 billion, excluding the newly injected funds. OpenAI plans to reinvest most of the new capital into NVIDIA hardware, but the two parties will not proceed with the $100 billion multi-year investment partnership announced last September.
<h2>From Complex Agreements to Direct Equity Investment</h2>
The agreement announced last September closely linked the two companies at the core of the AI boom in the form of a &#34;letter of intent,&#34; and helped NVIDIA's market value surpass $5 trillion a few weeks later.
Under the terms of the $100 billion agreement, NVIDIA originally planned to invest $10 billion in ten installments over several years, exchanging significant stakes in the AI startup as OpenAI's demand for computing power grew. In return, OpenAI planned to purchase millions of NVIDIA AI processors to deploy up to 10 gigawatts of new computing power.
However, the deal never progressed from a memorandum of understanding to a formal agreement. It is reported that Jensen Huang privately criticized OpenAI for its lack of commercial discipline and expressed concerns about the pressure it faces from competitors like Google and Anthropic. This arrangement has now been replaced by a more direct plan, with NVIDIA investing up to $30 billion in exchange for OpenAI stock.
According to sources close to both companies, this funding will support the construction of gigawatt-level new computing power and may lead to further transactions over time.
<h2>Both Parties Publicly Maintain Cooperative Relationship</h2>
Despite the significant changes in the deal structure, OpenAI CEO Sam Altman and Jensen Huang have been trying to dispel reports of a cooling relationship between the two companies.
Earlier this month, Altman stated on the X platform, &#34;We love working with NVIDIA; they make the best AI chips in the world. We hope to be their huge customer for a long time.&#34;
The next day, Huang told CNBC that any claims of &#34;disputes&#34; are &#34;nonsense.&#34; &#34;We love working with OpenAI,&#34; he said
According to informed sources, the San Francisco-based startup is still in the final stages of negotiations with SoftBank, which will also invest $30 billion. Amazon may invest up to $50 billion as part of a broader partnership involving the use of OpenAI models. The Abu Dhabi national-backed technology investment fund MGX and Microsoft are also expected to invest billions of dollars. OpenAI executives are meeting with venture capitalists and other investors this week to generate more interest.
According to one of the informed sources, during these meetings, OpenAI told investors that they plan to spend about $600 billion on computing resources by 2030, including resources from NVIDIA, Amazon, and Microsoft. The company believes that acquiring computing resources will be the best defense against competitors and is working to lock in as much infrastructure and power supply as possible to meet the executives' expectations for the infinite demand for AI tools

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According to reports, NVIDIA is close to finalizing an equity investment of up to $30 billion in OpenAI, replacing the previously announced $100 billion cooperation framework. The original agreement failed to materialize due to differences in terms and internal concerns, and Jensen Huang had also emphasized that it was non-binding. This new financing round may exceed $100 billion, with OpenAI's valuation reaching $730 billion (pre-investment)

- Nvidia is finalizing a $30 billion equity investment in OpenAI as part of a larger fundraising initiative, transitioning their complex partnership to a direct capital arrangement.  
- The initial $100 billion agreement stalled due to internal concerns at Nvidia, with significant restructuring now favoring a direct investment for equity rather than long-term commitments.  
- OpenAI plans to reinvest capital primarily in Nvidia's hardware, anticipating a valuation of $730 billion, as they strategize to secure computing resources essential for competing in the AI sector.

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Rumors come true? NVIDIA's "USD 100 billion investment" in OpenAI ultimately "discounted by 70%"