Nvidia stock surged Monday after the AI-chip leader announced plans to invest up to $100 billion in ChatGPT creator OpenAI.
The two companies announced a strategic partnership under which OpenAI will deploy at least 10 gigawatts of AI data centers running Nvidia processors. The data centers will include millions of Nvidia graphics processing units to enable OpenAI's next-generation infrastructure for artificial intelligence.
Nvidia will invest in OpenAI progressively as each gigawatt of capacity is deployed, the companies said in a news release. The first gigawatt of Nvidia systems will be deployed in the second half of 2026 using the Nvidia Vera Rubin platform. A gigawatt is a measure of power that is increasingly being used to describe the biggest clusters of AI processors.
The strategic partnership is currently in the form of a letter of intent. Nvidia and OpenAI expect to finalize details of the strategic partnership "in the coming weeks."
"Nvidia and OpenAI have pushed each other for a decade, from the first DGX supercomputer to the breakthrough of ChatGPT," Nvidia Chief Executive Jensen Huang said in a statement. "This investment and infrastructure partnership mark the next leap forward — deploying 10 gigawatts to power the next era of intelligence."
OpenAI will work with Nvidia as a preferred strategic compute and networking partner for its AI factory growth plans. The companies plan to "co-optimize" their development roadmaps for OpenAI's model and infrastructure software and Nvidia's hardware and software.
Nvidia Stock Hits Buy Point
The partnership complements the work the two companies are doing with such collaborators as Microsoft, Oracle, SoftBank and Stargate partners.
On the stock market today, Nvidia stock touched a buy point of 184.48 out of a flat base before pulling back, according to IBD MarketSurge charts. It rose to an all-time high of 184.55 in intraday trading.
Nvidia stock ended the regular session Monday up 4% to 183.61.
Nvidia Stock Rated 'Strong Buy'
Huang told CNBC that the 10-gigawatt project with OpenAI is equivalent to 4 million and 5 million graphics processing units. That's about what Nvidia will ship this year and "twice as much as last year," he said.
"This is the biggest AI infrastructure project in history," Huang said.
The partnership will generate at least $260 billion in revenue for Nvidia over the life of the partnership — and nearly $130 billion in net income at a roughly 50% margin, William Blair analyst Sebastien Naji said in a client note.
Barlays analyst Tom O'Malley estimated the revenue potential to Nvidia to be at least $350 billion.
CFRA Research analyst Angelo Zino upgraded Nvidia stock to strong buy from buy on the news. He also raised price target to 225 from 210.
Nvidia stock is on three IBD lists: Sector Leaders, Stock Spotlight and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
