Nvidia on Monday revealed plans to invest up to $100 billion in OpenAI, in a deal aimed at accelerating the build-out of data centers powered by Nvidia’s chips.
Under the agreement, OpenAI will deploy 10 gigawatts of compute via Nvidia systems, with the first gigawatt expected to come online in the second half of 2026 using Nvidia’s Vera Rubin platform.
OpenAI will purchase Nvidia’s chips in cash, while Nvidia takes a non-controlling equity stake in OpenAI. The companies emphasized that some deal terms are still being finalized.
“Circular financing” refers to a loop in which a company invests in its downstream customers, who then use those funds to buy the investor’s products. In the case of Nvidia and OpenAI, analysts worry that Nvidia’s capital infusion may prop up demand for Nvidia GPUs by essentially underwriting their customers’ purchases.
Stacy Rasgon of Bernstein warned:
“The action will clearly fuel ‘circular’ concerns.”
Meanwhile, Jay Goldberg of Seaport Global called the deal emblematic of “bubble-like behavior.” He compared it to having “your parents co-sign on your first mortgage.”
This is not Nvidia’s first time backing AI firms financially. In 2024 alone, the chipmaker participated in over 50 venture deals in the AI space. Many of those startups used capital to purchase Nvidia GPUs.
But the scale of the OpenAI deal is unprecedented. As Rasgon put it:
“The size of the OpenAI investment ‘appears to dwarf all the others’ … (it) will ‘likely fuel these worries much hotter than what we have seen previously’.”
Nvidia insists that the investment will not be used for direct GPU purchases by OpenAI. But the optics of the arrangement remain contentious.
Nvidia occupies a unique position: it is the dominant supplier of advanced chips critical for training AI models. As such, it benefits heavily from the AI boom—getting paid for both the hardware and, potentially, for anchoring the ecosystem.
By aligning deeply with OpenAI, Nvidia gains influence over a major buyer and secures long-term demand contracts. But that also puts regulatory and market pressure on the deal’s structure and fairness.
This deal comes amid increasing speculation about an AI bubble reminiscent of the late 1990s dot-com crash. Even OpenAI’s Sam Altman recently acknowledged that valuations of some AI startups may be stretched, even as he continues advocating for massive infrastructure investment.
If the broader AI investment cycle turns downward, the circular structure could exacerbate the downside—overbuilt capacity, lower demand, and tighter margins. As Goldberg cautioned:
“When times are good, this is going to make things better … but when the cycle turns … it makes things worse on the downside.”
The Nvidia-OpenAI tie-up is part of a broader trend of platform incumbents making strategic investments in AI startups to lock in demand. Microsoft, Amazon, and others have similarly backed AI firms to funnel workloads into their cloud systems.
But Nvidia’s dual role as hardware vendor and investor is relatively novel and raises unique circularity risks.
Moreover, Nvidia has publicly pledged that this agreement will not compromise GPU availability for other customers, assuring that no client will lose priority or access.
The AI race is entering a capital-intensive phase where compute infrastructure itself becomes the battleground.
The deal suggests Nvidia is confident in its ability to monetize not just chips, but the entire AI stack.
For OpenAI, the arrangement provides access to capital and compute capacity that may be difficult to obtain otherwise, especially as it remains a money-losing business.
But investor scrutiny will intensify. Transparent governance, fair pricing, and regulatory compliance will matter more than ever.
Nvidia’s $100 billion commitment to OpenAI is a watershed moment in the AI industry—both for its scale and for the questions it raises about capital flows. While the arrangement accelerates infrastructure deployment and cements Nvidia’s leadership, it also rekindles concerns about circular financing, demand inflation, and bubble dynamics.
If this structure holds, it may become a template for future tech investments—but history warns that overly tight loops of capital and demand can amplify both growth and risk. Stakeholders will now watch closely: not just the hardware rolls, but whether this deal serves sustainable AI progress or merely props up a fragile boom.