Nvidia Invests $100 Billion in OpenAI, Intensifying 'Too Big to Fail' Era

Nvidia has announced a $100 billion investment in OpenAI, the maker of ChatGPT. The investment aims to build data centers powered by Nvidia's chips. OpenAI is now considered "too big to fail" for the sake of the generative AI data center buildout. However, the investment has raised concerns about how OpenAI will generate the huge revenues and profits needed to pay for its obligations and provide a return to its investors.

Nvidia's recent $100 billion investment in OpenAI, the company behind ChatGPT, has sparked a mix of enthusiasm and concern among investors and financial professionals. The investment aims to build data centers powered by Nvidia's cutting-edge chips, positioning OpenAI as a pivotal player in the generative AI landscape. However, the move has raised questions about the sustainability of OpenAI's financial obligations and its ability to generate the necessary revenue and profits.

The deal, announced on September 12, 2025, has been well-received on Wall Street, with analysts boosting their revenue estimates for Nvidia. Evercore ISI analyst Mark Lipacis, for instance, increased his revenue estimates by $5.5 billion for the second half of 2026 Nvidia's OpenAI deal adds to a brewing concern. But will that actually hurt the stock?^[1]. The stock has also seen a surge, with Nvidia's share price reaching new records.

However, there are undercurrents of concern. The deal has fueled "circular" concerns, as noted by Bernstein analyst Stacy Rasgon. These concerns revolve around the possibility of OpenAI purchasing Nvidia chips and reselling cloud services built on these chips, potentially creating a self-reinforcing cycle Nvidia's OpenAI deal adds to a brewing concern. But will that actually hurt the stock?^[1]. Rasgon acknowledged that while these concerns are valid, the immediate demand picture for Nvidia looks healthy.

Moreover, the investment has raised questions about OpenAI's ability to generate the necessary revenue and profits to meet its $100 billion obligation. While the company's C-suite is driving AI initiatives, the cost and availability of data center space remain significant challenges Data center crunch leads businesses to play the long game^[2]. Enterprises are facing higher rent costs, particularly in key markets like Northern Virginia and Chicago, where rents have increased by 15% and 14.7% year over year, respectively Data center crunch leads businesses to play the long game^[2].

Despite these concerns, the investment has been seen as a strategic move by many analysts. Lipacis boosted his price target for Nvidia to $225 from $214, noting that the stock is trading below its nine-year median forward price-to-earnings ratio of 36 Nvidia's OpenAI deal adds to a brewing concern. But will that actually hurt the stock?^[1]. He believes the opportunity is worth the risk, especially with the growing demand for AI data center capacity.

In conclusion, Nvidia's $100 billion investment in OpenAI is a significant development in the generative AI landscape. While it presents opportunities for both companies, it also raises important questions about the sustainability of OpenAI's financial obligations and the potential impact on Nvidia's stock. Investors and financial professionals will be closely watching the developments in this space.