GPU manufacturer NVIDIA (NVIDIA) promised to invest in artificial intelligence maker OpenAI up to $10 billion, Huaer Street fell into a fierce discussion about real ideas. Market viewers believe this is another strong evidence of the booming develop...
GPU manufacturer NVIDIA (NVIDIA) promised to invest in artificial intelligence maker OpenAI up to $10 billion, Huaer Street fell into a fierce discussion about real ideas. Market viewers believe this is another strong evidence of the booming development of AI-based facilities. However, the tragic critics said that this was just a "financial" client that NVIDIA assisted.
According to foreign media reports, the NVIDIA strategic partner statement pointed out that OpenAI promises to purchase and build an AI data center that operates at least 10 GW of NVIDIA chips. NVIDIA's US$100 billion investment in OpenAI will adopt an advanced investment in deployment capacity, which means that NVIDIA will make corresponding investments for every 1GW of capacity deployed by OpenAI.
Investment research firm Vital Knowledge summarized in a report that the viewer's discussions focus on market trends, which is the latest news, which emphasizes that the current AI field is investing in a large amount of funds. With a series of large enterprises deploying unprecedented computing infrastructure, this shows that the explosive growth of the industry is still continuing. Overall, the market remains optimistic about this investment plan.
People point out that this is just the practice of NVIDIA in providing its largest and most famous customers. NVIDIA provides cash to OpenAI, and this cash flows back to NVIDIA in a round-trip manner to purchase its chip products. Vital Knowledge said in a report that NVIDIA is paying for its customers. In fact, many people have also tried to interpret NVIDIA's latest actions as a single pure supplier financing, and believe that its essence is that these investments will eventually return to NVIDIA.
Some market analysts expressed concern about the role played by NVIDIA. Although Gil Luria, an analyst at investment consultant DA Davidson, maintained a "buy" investment review for NVIDIA shares, and set the target price at $210. But in a report to customers, he said he was worried that NVIDIA had become the "investor of last resort" and took action to rescue OpenAI's promise of over-extension. Luria also pointed out that NVIDIA had previously had to come forward to bail out its initial public offering (IPO) for CoreWeave (CRWV), an AI cloud computing company.
Despite the dispute, many Huaer Street experts still believe that OpenAI's deal is a favorable investment for NVIDIA. Vivek Arya, an analyst at BofA Securities, estimates that NVIDIA is expected to generate $300 billion to $500 billion in revenue from this $100 billion investment. Therefore, Arya gave NVIDIA shares a "buy" investment rating, with a target price of US$235. However, Arya also reminded that the outside world will remain suspicious of this situation until NVIDIA clarifies that this type of suitability for large-scale investment to customers.
Mizuho analyst Jordan Klein believes that this transaction is the wise reason for NVIDIA to use its large cash flow. Klein explains that NVIDIA faces restrictions on how to deploy these funds as it expects to generate more than $100 billion in large free cash flow per year in the next few years. In fact, NVIDIA is unable to buy enough stocks and cannot recruit enough software and semiconductor engineers. At the same time, as China and the United States require supervision approval, large-scale purchases are difficult to complete successfully. So, Klein pointed out, why not invest in key customers who need capital and want to buy your products in large quantities? This is a strategic move.
Klein also pointed out that NVIDIA uses funds earned by the largest customers from Google, Amazon (AMZN), Meta Platforms (META) to Microsoft (MSFT), to help competitor OpenAI.
In terms of market reaction, after the NVIDIA stock price announced the cooperation news, it jumped 3.9% to close at US$183.61. But the stock price fell 2.8% on the subsequent trading day and closed at $178.43. Evercore ISI analyst Mark Lipacis raised the NVIDIA target price from $214 to $225, reiterating the "winning the big plate" investment evaluation. US silver analyst Arya further pointed out that the cooperation agreement between NVIDIA and OpenAI has increased the competition risks of its rival AI chip manufacturers, AMD and Broadcom.
