On September 22, the markets were jolted by news that Nvidia and OpenAI had signed a letter of intent to form a partnership. According to reports, OpenAI will deploy at least ten gigawatts of data center capacity on Nvidia’s computing systems to train and run its next-generation models. To support that effort, Nvidia has pledged to invest up to USD 100 billion in OpenAI in phases.
The first round of funding is expected in the second half of 2026, after OpenAI completes its first gigawatt-scale data center. This facility will be built on Nvidia’s upcoming Vera Rubin platform. The deal raises key questions: how should the investment be interpreted, and what impact will it have on both Nvidia and OpenAI?
A capital game of chips for equity
This USD 100 billion investment is not a straightforward cash infusion. It resembles a structured exchange of computing power for equity. Based on disclosures, Nvidia’s phased investment will finance OpenAI’s data center expansion, with a combined capacity of about 10 GW. Each tranche will be tied to construction milestones, ensuring the funds go specifically to infrastructure.
In return, OpenAI is expected to channel the capital back into Nvidia’s ecosystem by purchasing four to five million GPUs and related systems built on the Vera Rubin platform.
The result is a closed capital loop: Nvidia invests in OpenAI, OpenAI buys Nvidia’s chips, and the money cycles back. It is less about one-time spending than about restructuring asset ownership.
For OpenAI, the arrangement secures access to Nvidia’s accelerators, ensures large-scale computing capacity, and deepens integration with Nvidia’s software ecosystem. For Nvidia, it provides years of substantial chip sales.
During an earnings call in August, Nvidia CEO Jensen Huang said that building a 1 GW data center costs USD 50–60 billion, with roughly USD 35 billion going to Nvidia’s hardware. By that calculation, OpenAI’s planned buildout would cost USD 500–600 billion, of which about USD 350 billion would flow to Nvidia.
Nvidia’s USD 100 billion investment is also expected to secure a 25% stake in OpenAI, based on the company’s reported valuation of USD 500 billion. That would give Nvidia both a guaranteed hardware revenue stream and exposure to OpenAI’s software income and longer-term developments in artificial general intelligence.
The deal also signals to the industry that Nvidia’s dominance in artificial intelligence infrastructure remains firm. It suggests that competition is expanding beyond chip sales to include funding, technology platforms, talent, and alliances.
Microsoft’s exclusive partnership under threat
Microsoft has been OpenAI’s closest ally since 2019, investing more than USD 13 billion in the company. In return, OpenAI made Microsoft Azure its exclusive cloud provider, channeling its computing needs into Azure’s data centers. This arrangement helped anchor Azure’s growth strategy on OpenAI’s development of large-scale models.
The partnership also gave Microsoft the right to integrate OpenAI’s technologies into many of its core products, including Office, Bing, and GitHub Copilot. That integration reshaped Microsoft’s software into adaptive, AI-driven services and strengthened its position in enterprise applications.
But the exclusivity of the pact has weakened. OpenAI’s cooperation with Oracle was an early sign, and Nvidia’s investment could accelerate the shift.
By funding OpenAI, Nvidia reduces the company’s dependence on Azure and strengthens its negotiating position. If OpenAI is no longer tied to Microsoft for compute, Microsoft’s influence over its roadmap diminishes. This could open the door for OpenAI to work with other tech companies, including Google and Amazon, altering the balance of competition in applied AI.
If that happens, Microsoft’s advantage in AI applications may narrow.
Nvidia’s revaluation moment
For Nvidia, the OpenAI deal could reshape how investors value the company.
Until now, Nvidia has been viewed primarily as a hardware company, subject to cyclical demand and large capital commitments. Software companies like OpenAI, by contrast, are valued more highly for their scalability, recurring revenue, and lower marginal costs once infrastructure is in place.
By taking a significant stake in OpenAI, Nvidia positions itself on both sides of AI’s evolution. It secures near-term chip revenue while gaining exposure to longer-term, higher-margin software growth.
That dual role could shift Nvidia’s valuation from being seen as a hardware supplier to an integrated AI ecosystem leader spanning hardware, software, and services.
There is precedent for such a shift. Apple’s valuation once rose and fell in line with iPhone sales cycles. As Apple expanded its software and services, investors began treating it as an ecosystem company, giving it steadier multiples and shielding it from hardware downturns.
Nvidia may now be entering a similar phase. If so, this deal could mark the start of a new valuation framework, driven not only by chips but also software, partnerships, and developments in artificial general intelligence.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Ding Mao for 36Kr.