Nvidia is to invest up to $100 billion (£74bn) in OpenAI under a deal that will also involve supplying the ChatGPT developer with advanced AI accelerator chips, in the company’s latest major investment in another tech giant.

The investment will give OpenAI the cash and access to buy advanced chips to power AI data centres and maintain its dominance in the market.

Industry watchers noted that the deal means that much of the funding that comes from Nvidia will return back to the chipmaker in the form of cash payments for AI chips.

‘Preferred’ status

The deal will also see Nvidia receiving ownership of non-controlling shares in OpenAI, Reuters cited an unnamed source as saying.

The funding is intended to back the construction of Nvidia data centre systems that require 10 gigawatts of power, a means of measuring data centre capacity, the companies said.

Nvidia’s first investment of $10bn will be deployed when the first gigawatt is completed, with investments to be made at valuations that are current at the time as the project goes forward.

The first tranche of investment is expected to be deployed in late 2026 when systems come online using Nvidia’s next-generation Vera Rubin systems, the companies said.

They said that under the deal, Nvidia will be a “preferred” supplier to OpenAI.

OpenAI, like other major tech firms, has been exploring ways of diversifying away from Nvidia as a supplier, including developing its own in-house AI chips with Broadcom and Taiwan’s TSMC, and the deal signifies that Nvidia is working to defend its dominant position.

‘Everything starts with compute’

The company faces increasing competition from AMD as well as other in-house chips being developed by the likes of Amazon, Google and Microsoft.

The deal with Nvidia is understood not to affect OpenAI’s plans for the in-house chip with Broadcom or its relationship with Microsoft, which supplies much of OpenAI’s cloud infrastructure under an existing investment deal.

OpenAI and Nvidia said they plan to finalise their partnership details in the coming weeks.

“Everything starts with compute,” said OpenAI chief executive Sam Altman in a statement.

The deal announced with Nvidia is in addition to existing infrastructure projects OpenAI is carrying out with Microsoft, Oracle, SoftBank and the Stargate project.

A recent round of investment, in which Nvidia participated, valued OpenAI at $500bn.

Last week Nvidia took a $5bn stake in Intel and said the companies would work together on AI chips. Nvidia also said last week it invested nearly $700m in UK data centre start-up Nscale.

Last week CNBC reported that the company spent more than $900m to hire Rochan Sankar, chief executive of AI start-up Enfabrica, and other employees at the company, and to license its technology.

Antitrust concerns

Nvidia’s market valuation has surged during the AI boom, and it is currently worth nearly $4.5tn.

Last year the US Justice Department and the Federal Trade Commission reached a deal paving the way for potential antitrust investigations into the roles of Microsoft, OpenAI and Nvidia in the AI industry, and Nvidia and other tech companies in September 2024 were served with Justice Department subpoenas, but as yet no formal charges have been filed.

Earlier this month, however, regulators in China said Nvidia violated competition laws in relation to Nvidia’s 2020 acquisition of interconnect maker Mellanox.