Nvidia to invest in OpenAI funding round after $100B deal stalls
CEO Jensen Huang commits to participation as original infrastructure agreement faces internal scrutiny
Nvidia chief executive Jensen Huang has confirmed the chipmaker will participate in OpenAI's current funding round, following the collapse of a broader infrastructure deal that could have reached $100 billion. The scaled-back commitment marks a shift in strategy for the world's most valuable company, which had been negotiating a massive investment partnership with the artificial intelligence pioneer since September 2025.
Huang stated the company would "absolutely be involved in this round of investment in OpenAI" during recent discussions, signaling continued confidence in the partnership despite the stalled mega-deal. The current round aims to raise up to $100 billion from multiple investors, with Nvidia now expected to contribute "tens of billions of dollars" rather than the previously contemplated $100 billion infrastructure agreement, according to multiple reports detailing the renegotiated terms.
The breakdown of the original agreement stems from internal skepticism at Nvidia regarding the deal's scale and structure. Huang raised concerns about OpenAI's business discipline and the intensifying competitive landscape in artificial intelligence development, people familiar with the discussions told Business Today. The infrastructure-focused agreement, which would have positioned Nvidia as a primary supplier of computing power for OpenAI's operations, failed to advance beyond a September letter of intent.
Nvidia's shares, which have rallied more than 120% over the past year, traded at $191.13 on Friday, giving the company a market capitalization of $4.66 trillion. The stock has experienced heightened volatility in recent weeks as investors grapple with the sustainability of the artificial intelligence boom that has propelled Nvidia to become the world's most valuable company. Shares are down 0.7% over the past five trading days amid broader technology sector pressure.
The company's fundamentals remain robust, with revenue growing 62.5% year-over-year in the most recent quarter and earnings per share surging 66.7%. Nvidia's data center business, which accounts for the majority of sales, continues to benefit from unprecedented demand for graphics processing units used in AI training and inference. The company maintains a 53% profit margin and a price-to-earnings ratio of 47.4, though its forward P/E of 24.6 suggests analysts expect earnings growth to accelerate.
Wall Street analysts remain divided on Nvidia's prospects despite the OpenAI investment recalibration. Of 64 analysts covering the stock, 60 rate it a buy or strong buy, with an average target price of $253.19, according to market data. However, price targets for 2026 range widely from a bearish $140 to a bullish $352, reflecting uncertainty about the duration and intensity of AI infrastructure spending cycles.
The scaled-back OpenAI investment represents a more measured approach to capital deployment as Huang seeks to balance aggressive growth opportunities with shareholder returns. Rather than a transformative infrastructure partnership that would have deeply intertwined the two companies, Nvidia's participation in the funding round positions it as a strategic shareholder while preserving flexibility to pursue other partnerships and investments across the AI ecosystem.
OpenAI, which developed the ChatGPT application that sparked the current generative AI boom, is seeking to raise capital to fund massive computing requirements and expand its product offerings. The company's funding round comes as competition intensifies from well-resourced rivals including Google's DeepMind, Anthropic, and Meta Platforms, all of which are investing billions in their own large language model capabilities.
Nvidia's continued involvement with OpenAI, even at a reduced scale, underscores the symbiotic relationship between chipmakers and AI developers. Nvidia's GPUs remain the industry standard for training large language models, while OpenAI represents one of the largest and most visible customers for AI infrastructure. The partnership extension ensures Nvidia maintains a close relationship with a key customer while avoiding the concentration risk that would have accompanied a $100 billion single-company commitment.
For investors monitoring Nvidia's trajectory, the OpenAI investment strategy offers insight into Huang's capital allocation philosophy amid a period of unprecedented opportunity and risk. The company's ability to maintain technological leadership while navigating complex partnership dynamics will be critical as it seeks to justify its premium valuation and sustain the growth that has driven its market capitalization beyond $4.6 trillion.