At an event in Taipei this weekend, CEO Jensen Huang made a splash when he said Nvidia (NVDA 1.20%) will participate in OpenAI's latest funding round, potentially making "the largest investment we've ever made."
"We will invest a great deal of money," Huang told reporters at the event. "I believe in OpenAI. The work that they do is incredible. They're one of the most consequential companies of our time." While Huang didn't specify exactly how much the investment would be, he did say it would be "huge."
Image source: Nvidia.
The start of something big?
OpenAI is in talks to raise as much as $100 billion from a number of well-heeled investors, including Nvidia, Microsoft, Amazon, and SoftBank. This funding round could value OpenAI at $750 billion, making it one of the world's most valuable private companies.
Last September, Nvidia announced a "landmark strategic partnership," in which OpenAI would deploy at least 10 gigawatts of AI data centers using millions of the chipmakers next-generation Vera Rubin graphics processing units (GPUs). At the time, Nvidia said it intended to invest up to $100 billion in OpenAI as each gigawatt was brought online.
Huang's comments come on the heels of a report that suggested the $100 billion deal was on the rocks, according to The Wall Street Journal. The report, which cited "people familiar with the matter," suggested Nvidia was having second thoughts about the size of the investment, noting that the deal was "nonbinding."
When asked about the report, Huang replied, "That's nonsense." When asked if the current investment would be $100 billion, he replied, "No, no, nothing like that.
NASDAQ: NVDA
Key Data Points
Investors have been increasingly concerned about the circular nature of some artificial intelligence (AI) deals. The relationship between OpenAI and Nvidia is a great example. OpenAI will use Nvidia's GPUs to build its 10-gigawatt AI data centers, and in return, Nvidia will invest up to $100 billion in OpenAI. Investors are worried these agreements may be artificially boosting demand.
There have been numerous reports that OpenAI may be planning an initial public offering (IPO) later this year. Technology stocks, particularly those related to AI, tend to generate a great deal of excitement when they debut. For example, neocloud provider CoreWeave is up more than 125% since its March 2025 IPO, and rival Nebius Group has soared 368% since it resumed trading in late 2024.
As an early investor, Nvidia's stake in OpenAI could potentially be a lucrative one. That said, there's no way to know for sure if the start-up will ultimately be successful. Nvidia has invested in several fledgling AI companies, only to later sell those positions. There are simply too many unknowns at this point for investors to draw any conclusions about this investment.
On the other hand, Nvidia has a price/earnings-to-growth (PEG) ratio of 0.8, when any number less than 1 is the standard for an undervalued stock. Given the company's current and expected growth, Nvidia seems like an attractive opportunity.
