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Is Nvidia's Deal With OpenAI a Game Changer?
NvidiaNvidia(US:NVDA) The Motley Foolยท2025-05-30 21:45

Core Insights - OpenAI, Oracle, and SoftBank have formed a consortium named Stargate, committing to invest $500 billion in AI infrastructure in the U.S. [1] - Nvidia is involved in a new data center for OpenAI, which could significantly benefit the company [2][4] - OpenAI's growing demand for compute power necessitates partnerships beyond Microsoft, leading to the creation of Stargate [4] Nvidia and OpenAI Collaboration - OpenAI has integrated its services, like ChatGPT, into Microsoft's ecosystem but is now seeking additional partnerships [3] - Oracle plans to purchase approximately 400,000 Nvidia GPUs for OpenAI's Texas data center, potentially costing up to $40 billion [5] - Nvidia's GPUs are critical for OpenAI's compute needs, indicating strong demand for its new Blackwell architecture [10] Market Potential and Future Outlook - McKinsey & Company estimates that nearly $7 trillion will be spent on AI infrastructure over the next five years, with hardware providers being the primary beneficiaries [7] - Nvidia's selection as a primary chip supplier for Stargate's initial projects suggests a long-term relationship with OpenAI and potential for more contracts [8] - OpenAI is also exploring custom chipsets but currently relies heavily on Nvidia's GPUs for its compute power [9] Investment Considerations - Nvidia's stock has seen a valuation compression, with a forward P/E multiple of 32.6, indicating potential buying opportunities [13] - The deal with OpenAI may signal strong long-term prospects for Nvidia, especially as more AI infrastructure deals materialize [14]