Nvidia nears $30 billion OpenAI stake in pivot from $100 billion plan
Equity investment replaces infrastructure pact as chipmaker strengthens AI partnership
Nvidia is nearing a $30 billion equity investment in OpenAI, marking a significant shift from a previously announced $100 billion infrastructure partnership as the chipmaker seeks to deepen ties with the artificial intelligence leader. The deal, which could be finalized as early as this weekend, values OpenAI at approximately $730 billion and represents a direct stake in OpenAI's funding round, according to reports.
The new investment replaces a strategic partnership announced in September 2025, which outlined a commitment of up to $100 billion tied to the deployment of 10 gigawatts of Nvidia computing systems. That original agreement was structured as a milestone-based arrangement, with Nvidia investing progressively as OpenAI deployed each gigawatt of infrastructure. The first phase had been anticipated to come online in the second half of 2026.
Nvidia shares were little changed in after-hours trading following reports of the smaller investment, reflecting investor uncertainty about the strategic implications of the revised deal. The stock closed at $187.90 on Thursday, giving the company a market capitalization of $4.58 trillion. Nvidia's stock remains 11% below its 52-week high of $212.18, though it has more than doubled from its 52-week low of $86.60.
The shift from an infrastructure pact to direct equity ownership raises questions about so-called "circular financing" arrangements, where OpenAI would likely reinvest a substantial portion of Nvidia's capital back into purchasing Nvidia's graphics processing units. This arrangement would effectively create a self-reinforcing cycle between the two companies, with OpenAI's funding indirectly returning to Nvidia through hardware purchases.
Analysts have noted that the new structure offers both companies greater flexibility compared to the rigid deployment milestones of the original agreement. The direct equity stake allows Nvidia to participate in OpenAI's potential upside while avoiding long-term infrastructure commitments that may have strained its balance sheet. Nvidia reported cash, cash equivalents, and marketable securities of $60.6 billion as of October 26, 2025, the end of its fiscal third quarter—suggesting the company can comfortably fund a $30 billion investment without excessive leverage.
OpenAI's broader funding round includes other strategic investors, with Amazon reportedly considering an investment of up to $50 billion and SoftBank potentially contributing as much as $30 billion. The total round could exceed $100 billion, with allocations from major investors expected to be finalized by the end of February 2026. Amazon's investment is said to be conditioned on OpenAI increasing its use of Amazon's cloud infrastructure and AI chips, potentially complicating the competitive landscape for AI hardware providers.
The timing of the deal is notable as Nvidia prepares to release its fourth-quarter and fiscal year 2026 results on February 25, 2026. Analysts maintain a bullish outlook on the stock, with 64 analysts rating Nvidia a buy or strong buy and an average target price of $253.88, representing 35% upside from current levels. The company has demonstrated remarkable financial strength, with quarterly revenue growth of 62.5% year-over-year and a profit margin of 53%. Nvidia's price-to-earnings ratio of 46.5 appears elevated compared to traditional valuation metrics, but its forward P/E of 23.75 suggests strong earnings expectations are already priced into the stock.
For Sam Altman, OpenAI's chief executive, the revised investment structure may represent a more favorable arrangement. According to reports citing sources familiar with the negotiations, Altman "hopes to remain a gigantic customer" of Nvidia while avoiding the infrastructure deployment obligations that could have constrained OpenAI's flexibility in choosing cloud and hardware partners.
The strategic partnership between Nvidia and OpenAI underscores the intensifying competition in the AI infrastructure market. As companies race to build out massive computing facilities to train and deploy large language models, chipmakers like Nvidia are increasingly seeking to secure demand through strategic investments and partnerships with key AI developers. The move also highlights the growing concentration of capital and technology power in the AI sector, with a handful of companies controlling both the computing hardware and the software models that depend on it.
Investors will be watching Nvidia's earnings announcement next week for any commentary on the OpenAI deal and its implications for the company's capital allocation strategy. With shares trading below their 52-week high despite the company's dominant market position in AI chips, the market appears to be awaiting clarity on how Nvidia plans to deploy its substantial cash reserves amid increasing competition in the semiconductor space.