On September 22 local time, NVIDIA announced that it would make a strategic investment of up to $100 billion (approximately RMB 711.27 billion) in the AI company OpenAI, and the two companies will cooperate to build large-scale artificial intelligence data centers and other infrastructure.

This news boosted NVIDIA's stock price, which rose more than 4% on the same day, reaching a new historical high, with its total market value approaching $4.5 trillion.

According to sources familiar with the matter, the funds will be released in stages, with the first $10 billion to be made available upon signing the agreement. NVIDIA will invest in cash and receive equity in OpenAI as part of the deal. Subsequently, as each gigawatt of computing power is deployed, NVIDIA's investment amount will be gradually increased. OpenAI can also use this funding to purchase NVIDIA's chips.

This strategic cooperation is backed by a series of high-level commercial agreements. At this point, the "ONO" tripartite alliance consisting of OpenAI, NVIDIA, and Oracle has officially taken shape, and a capital chain centered around "large models - cloud infrastructure - computing chips" has begun to take shape.

The collaboration started in June this year. As an important component of its "Stargate" program, OpenAI signed a cloud service contract worth up to $300 billion with Oracle, with a term of about five years. According to the agreement, OpenAI will pay Oracle approximately $6 billion annually starting in 2027 to obtain its cloud computing services. In addition, the two companies plan to jointly build a data center with a total capacity of 5 gigawatts.

The surge in computing power demand will undoubtedly bring a huge demand for basic hardware, and NVIDIA's formal entry becomes a key link in the entire ecosystem. According to the agreement, OpenAI will use the funds provided by NVIDIA to build and deploy at least 10 gigawatts (GW) of AI data centers for training and running next-generation large models. When interviewed by CNBC, NVIDIA CEO Jensen Huang stated that 10 gigawatts of computing power is equivalent to 4 million to 5 million graphics processing units (GPUs), a number that is approximately equal to NVIDIA's total shipments this year. "This is a huge project," Huang said.

At this point, the collaboration among the three tech giants has formed a unique funding cycle model: OpenAI purchases cloud services from Oracle; as an infrastructure provider, Oracle needs to purchase a large number of GPUs from NVIDIA to build data centers; and after NVIDIA receives the procurement funds from Oracle, it will return part of the revenue to OpenAI through strategic investment to support its continuous expansion.

On the surface, this seems to have become a "win-win" cooperative model - OpenAI solves its urgent need for computing power, Oracle gains hardware for building cloud infrastructure, and NVIDIA sells a large amount of core hardware, and the rising stock price is obviously what investors are happy to see.

However, this capital cycle, which can be described as "lifting one foot with the other," inevitably comes with great risks.

Firstly, as an AI company valued at hundreds of billions of dollars, OpenAI has not yet achieved profitability, and it is expected to incur losses of over $5 billion in 2025. Its annual revenue of about $10 billion is far less than its annual cloud service expenses of $6 billion. OpenAI also faces fierce competition from companies such as Google and Anthropic.

Additionally, Oracle is also facing financial problems. Reports indicate that Oracle's expenditures to keep up with the AI boom have exceeded its cash flow, and its debt burden is much higher than other cloud service providers. For comparison, Microsoft's total debt-to-equity ratio is 32.7%, while Oracle is as high as 427%.

Analysts pointed out that the so-called "ONO" alliance is more like a high-risk game of tightrope walking, and the deep integration of interests means a higher systemic risk - any technical, financial, or strategic issues on any side could trigger a chain reaction. At the same time, investors are also concerned about the potential for market bubbles, similar to the dot-com bubble of the past.

Although the "ONO" alliance has demonstrated strong resource integration capabilities and received a positive market response, the future prospects of this multi-billion-dollar AI infrastructure competition remain to be observed. As of now, neither NVIDIA nor OpenAI has disclosed specific details or timelines for the investment. An NVIDIA representative refused to comment on this.

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Original: https://www.toutiao.com/article/7553186853747393063/

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