Nvidia and OpenAI drive $1 trillion AI market with interlinked deals, raising concerns about circular financing inflating the AI boom.

Nvidia and OpenAI drive $1 trillion AI market with interlinked deals, raising concerns about circular financing inflating the AI boom.

In a move that could significantly impact the global AI market, Nvidia Corp. and OpenAI have struck a series of deals that could potentially inflate the AI boom. Two weeks ago, Nvidia agreed to invest as much as $100 billion in OpenAI to fund a data-center buildout that could power a major city . This arrangement, however, has been criticized for its "circular" nature, where OpenAI commits to filling those sites with millions of Nvidia chips.

Undeterred by the criticism, OpenAI this week inked a similar deal with Nvidia rival Advanced Micro Devices Inc. (AMD) to deploy tens of billions of dollars' worth of its chips . As part of the tie-up, OpenAI is poised to become a preferred partner for AMD, further cementing the interlinked nature of these deals.

Nvidia's long-term commitment to OpenAI is substantial. The company plans to invest up to $100 billion over the next decade to support AI data centers using Nvidia chips, including at least 10 gigawatts of systems . This investment is expected to generate significant revenue for Nvidia, with projections indicating over $500 million in annual revenue from GPUs by Q1 2026.

The series of deals raises concerns about the potential for circular financing to inflate the AI market. While these investments could drive innovation and growth, the interlinked nature of the deals could also lead to market distortions and potential regulatory scrutiny.