Around the same time that Nvidia CEO Jensen Huang expressed surprise at OpenAI’s multibillion-dollar deal with rival AMD, shortly after his company agreed to invest up to $100 billion in the AI model maker, Sam Altman said more similar deals were in the works.
Mr. Huang appeared on CNBC’s Squawk Box on Wednesday. Asked if he knew about the partnership with AMD before it was announced, he said, “Not really.”
As TechCrunch previously reported, OpenAI’s deal with AMD is unusual. AMD has agreed to grant OpenAI a large transfer of AMD stock (up to 10% over several years), subject to factors such as stock price appreciation. Instead, OpenAI uses and helps develop chipmakers’ next-generation AI GPU chips. This makes OpenAI a shareholder in AMD.
Nvidia’s deal is the opposite. Nvidia invested in an AI modeling startup and became a shareholder in OpenAI.
Although OpenAI has been using Nvidia equipment for years through cloud providers such as Microsoft Azure, Oracle OCI, and CoreWeave, “this is the first time we are selling directly to these providers,” Huang explained. He added that his company will continue to supply equipment to cloud manufacturers as well.
These direct sales also include AI equipment beyond GPUs, such as systems and networking, and are intended to “prepare” OpenAI for the day when it becomes its own “self-hosted hyperscaler,” Huang said. In other words, if you’re using your own data center.
However, Huang admitted that OpenAI “doesn’t have the funds yet” to buy all this equipment. He estimates that each gigawatt of AI data center will cost OpenAI “$50 billion to $60 billion” to cover everything from land and power to servers and equipment.
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So far, OpenAI has commissioned 10 gigawatts worth of U.S. facilities in 2025 through the $500 billion Stargate deal with partners Oracle and SoftBank. (Plus, we signed a $300 billion cloud deal with Oracle.)
The partnership with Nvidia was for at least 10 gigawatts of AI data centers. The partnership with AMD was 6 gigawatts. In addition, the company’s Stargate UK partnership includes data center expansion in the UK, as well as other European initiatives. By some estimates, OpenAI closed similar deals worth $1 trillion this year.
Like the AMD deal, Nvidia’s deal has been criticized for being “cyclical,” Bloomberg reported. Critics argue that Nvidia is essentially taking over OpenAI and getting a stake in the AI startup in return for its efforts.
From Altman to the world: Expecting more
While Huang was analyzing OpenAI’s infrastructure needs for CNBC, an interview with OpenAI CEO Sam Altman on Andreessen Horowitz’s a16z podcast was deleted.
In the podcast, a16z co-founder Ben Horowitz told Altman that he was “very impressed with the improvement in deal structure,” referring to these recent deals. Andreessen Horowitz is an investor in OpenAI, so it would be a shock if he wasn’t impressed. OpenAI has discovered a potential way to acquire billions of dollars of equipment with other people’s money. repetition.
When asked about these recent deals, Altman said, “Expect more from us in the coming months.”
“We decided it was time to make a very aggressive infrastructure bet,” Altman said, believing that OpenAI’s future models and other upcoming products will be much more capable, which will drive even more demand.
The problem is that while OpenAI’s revenue is currently less than $1 trillion, it’s apparently growing rapidly and is expected to reach $4.5 billion by the first half of 2025.
But Altman clearly believes the investment will eventually pay for itself. “I have never been more confident about the research roadmap in front of us and the economic value that can be gained from using these (future) models.”
But OpenAI alone won’t deliver all the economic wealth, he said.
“To make a bet on this scale, you need the support of the entire industry, or a large portion of the industry. And this is a huge amount, from the electronic level to model distribution and everything in between. So we’re going to partner with a lot of people,” Altman said, noting that more deals are expected in the coming months.
So hold on, tech industry. OpenAI is still working and responding.
