NVIDIA had entered into a mega-deal with OpenAI a few weeks ago, but uncertainties still surround the partnership, which may not ultimately result in a final agreement.
NVIDIA's OpenAI Partnership Is Yet to Materialize, But Team Green Is Confident In What ChatGPT's Creator Is Building
For those unaware, the NVIDIA-OpenAI partnership has scaled up to a massive $100 billion partnership, marking one of the largest collaborations by the AI giant. It involved a 10-gigawatt compute capacity buildout around next-gen Vera Rubin systems. Not only was the deal seen by massive 'optimism' amongst the common people, but it also brought in a huge customer for NVIDIA's next-gen AI lineup, essentially guaranteeing its adoption. However, according to the latest 10-Q filing by NVIDIA (via CNBC), it is revealed that deals made with companies like OpenAI, Intel, and Anthropic may not materialize at all, or the terms may be modified along the way.
There is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity or other potential investments, or that any investment will be completed on expected terms.
- NVIDIA 10-Q filing
Of course, this certainly doesn't indicate the fallout of an NVIDIA-OpenAI deal, as the 10-Q filing is primarily about risk disclosures. However, it's not incorrect to say that Team Green still needs to finalize the agreement into an 'end contract', similar to what AMD did with OpenAI. For those unaware, NVIDIA has been entering into massive deals consistently over the past few months, with notable examples including partnerships with OpenAI, Intel, and Anthropic, all involving infrastructure buildout or the prospect of it.
One of the key concerns in the industry is whether the AI firms involved in this deal can actually secure the necessary financial means to commit to the agreement. Interestingly, NVIDIA's CEO, Jensen Huang, discussed this during his interview with Bloomberg News after reporting Q3 earnings.
Well, we’re thoughtful, along with OpenAI, thoughtful in aligning on, and taking into consideration visibility of demand and their financing capabilities. All of that has to be in accordance, has to be aligned, has be coherent, before we start to build out. And so, I think the ambition’s large, but the execution is disciplined, and that’s really, really important to recognize.
- NVIDIA's CEO via Bloomberg News
NVIDIA has also reacted positively to the advancements being made by OpenAI when it comes to increasing adoption of its AI services, claiming that the AI giant has grown its weekly user base to 800 million with 'healthy' gross margins. Team Green is 'apparently' monitoring whether the commitments being made by OpenAI will actually materialize, which is why the cautionary statement regarding the future of these investment deals, as mentioned in the 10-Q, makes sense.
The AI buildout currently underway is on such a massive scale that future computing demand is simply unpredictable. Even with partnerships involving manufacturers and AI giants, the world still lacks sufficient capabilities to cater to the demand coming from the AI sector.
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