Nvidia’s earlier intention to allocate as much as $100 billion to OpenAI to support training and running its newly released AI models has encountered a setback. This unexpected situation prompted certain stakeholders who supported the US-based semiconductor company to raise questions about the deal.
This deal was initially announced at Nvidia’s headquarters in Santa Clara, California, last September. The agreement included a memorandum of understanding in which the graphics processing giant pledged to provide OpenAI with at least 10 gigawatts of computing power. Another promise was to make a significant investment of up to $100 billion to help fund the firm. In return, the large language model developer agreed to lease Nvidia’s chips.
With the deal terms clear, OpenAI expects the negotiations to conclude soon. Nonetheless, these discussions have not proceeded from the initial stages.
Nvidia’s CEO expressed concerns about the OpenAI deal
Analysts admitted that the Nvidia-OpenAI deal is massive. They decide to consult someone close to the firm to learn about its current process. While maintaining anonymity because the talks were private, the individual revealed that the recent discussion concerned a potential equity investment valued at tens of billions, which is a crucial element of OpenAI’s investment strategy.
Meanwhile, industry associates alleged that Nvidia’s CEO, Jensen Huang, recently informed them in private that the original $100 billion agreement was not yet legally binding and required finalization.
Huang also raised concerns about what he perceives as a lack of discipline in the ChatGPT creator’s business strategy, hence expressing fears about rivals such as Google and Anthropic.
In response to the CEO’s remarks, a spokesperson from OpenAI mentioned that, “Our teams are currently working through the specifics of our partnership. Nvidia technology has been crucial to our successes from the beginning, powers our systems today, and will continue to be essential as we expand in the future.”
On the other hand, a representative from Nvidia noted that the tech giant has been the US-based AI lab’s long-standing preferred partner. Afterwards, the spokesperson expressed their excitement about continuing to partner with the firm.
This discussion took place at a time when OpenAI was preparing to secure an IPO by the end of this year. To demonstrate its commitment to going public, the tech company has spent most of the last year seeking to acquire substantial computing resources to support its overall growth and products.
Analysts warned Sam Altman’s habit of loudly announcing deals
Following the current situation surrounding the OpenAI-NVIDIA deal, sources noted that the halt is a setback for OpenAI’s plan to go public. They also argued that the company’s CEO, Sam Altman, has a habit of loudly announcing deals, which sometimes leads to negative consequences when the agreement’s details are not yet finalized.
In the meantime, Huang described this deal as the largest computing initiative ever. He made this statement during a joint announcement after introducing the agreement with Altman and Greg Brockman, a co-founder and the President of OpenAI.
While this announcement hit headlines, Nvidia’s stock surged by almost 4%, raising the firm’s market value to around $4.5 trillion. As part of the deal, the world’s leading AI chip supplier discussed potentially supporting some of OpenAI’s loans to finance the construction of its own data centers, according to information from sources close to the situation.
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Source: https://www.cryptopolitan.com/nvidias-openai-investment-hits-roadblocks/
