Nvidia halts $100B OpenAI investment plan
Internal doubts stall ambitious deal aimed at deploying Nvidia systems for OpenAI's AI infrastructure
Nvidia has paused its ambitious plan to invest up to $100 billion in OpenAI, according to reports from the Wall Street Journal and Bloomberg, marking a significant shift in the relationship between two of artificial intelligence's most prominent players.
The chipmaker, which paused the proposed investment in late January 2026, had signed a letter of intent in September 2025 outlining progressive investments tied to the deployment of Nvidia systems for OpenAI's next-generation AI infrastructure. However, the deal was never finalized and has now stalled due to internal doubts within Nvidia about OpenAI's business strategy, with CEO Jensen Huang privately expressing concerns.
Nvidia shares closed at $190.16 on January 30, down 1.22% on the day, reflecting investor uncertainty about the implications of the stalled deal. The stock has retreated from its 52-week high of $212.18 reached earlier in the year, though it remains well above its 52-week low of $86.60. With a market capitalization of $4.66 trillion, Nvidia remains the world's most valuable chipmaker, but the OpenAI development raises questions about the company's capital deployment strategy amid intensifying competition in the AI infrastructure market.
The proposed $100 billion investment would have been one of the largest corporate bets in AI history, designed to support OpenAI's massive computing needs for training and running advanced AI models. The partnership was originally framed as a strategic alignment that would lock in OpenAI as a key customer for Nvidia's specialized hardware while providing the AI research organization with reliable access to cutting-edge chips.
However, growing competitive pressures in the semiconductor market may have influenced Nvidia's cautious approach. Broadcom and other chipmakers have been gaining ground with custom AI processors that some customers find more cost-effective than Nvidia's general-purpose GPUs. Major tech companies, including Google and Amazon, have increasingly been designing their own custom chips for AI workloads, potentially reducing their reliance on Nvidia's products.
Analysts remain broadly positive on Nvidia's long-term prospects despite the OpenAI setback. The company currently boasts 60 analysts rating it as a buy or strong buy, compared to just three hold ratings and one sell rating, with an average price target of $253.19 as of January 29, 2026. Nvidia's fundamentals remain robust: the company reported $187.1 billion in trailing twelve-month revenue with a profit margin of 53%, and quarterly revenue growth of 62.5% year-over-year.
The OpenAI investment pause comes at a pivotal moment for the AI industry. OpenAI has been seeking substantial funding to address the enormous costs of running and training large language models, with the company reportedly pursuing a funding round of up to $100 billion that could involve Amazon and Microsoft. Nvidia's decision to hold back suggests the chipmaker may be reassessing its role in the AI ecosystem, potentially shifting from direct equity investments to focusing on its core business of designing and selling hardware.
For Nvidia, the strategic question is whether maintaining distance from major AI customers allows for more neutral positioning as a supplier to the entire industry, or whether deeper integration through strategic investments would have provided better long-term visibility into AI infrastructure demand. The company's P/E ratio of 47.41 suggests investors are still pricing in significant growth expectations, meaning any hesitation in capital deployment could face shareholder scrutiny.
Looking ahead, Nvidia will need to demonstrate that its core GPU business can sustain growth without the kind of strategic customer relationships that the OpenAI investment would have represented. The company's forward P/E ratio of 24.63 indicates that investors expect continued expansion, but the competition from custom chip alternatives and the growing trend of tech companies designing their own AI processors present genuine challenges to Nvidia's dominance.
The OpenAI deal pause may ultimately reflect a more disciplined approach to capital allocation from Nvidia, which has seen its market value surge more than 140% over the past year as AI enthusiasm drove semiconductor stocks to record highs. However, it also underscores the complex dynamics between hardware providers and AI software companies, as both sides navigate the rapidly evolving landscape of artificial intelligence infrastructure.