Nvidia Is Partnering Up With OpenAI. Should You Buy, Sell, or Hold NVDA Stock Here?

Core Insights - Nvidia announced a $100 billion investment commitment in OpenAI, leading to a nearly 4% increase in shares and adding $170 billion to its market capitalization [1] - The partnership involves deploying 10 gigawatts of Nvidia systems for OpenAI's next-generation AI infrastructure, equating to 4-5 million GPUs [1] Investment and Revenue Streams - The deal creates a virtuous cycle where OpenAI receives investment capital and spends it on Nvidia's chips and systems, ensuring significant future revenue streams for Nvidia [2] - Each gigawatt of data center capacity costs $50-60 billion, with $35 billion allocated directly to Nvidia hardware, indicating a strong financial commitment [2] - The first phase of this partnership is set to launch in late 2026, utilizing Nvidia's next-generation Vera Rubin platform [2] Market Position and Growth Potential - This partnership reinforces Nvidia's dominance in AI infrastructure, catering to OpenAI's 700 million weekly active users who require substantial computing power [3] - Nvidia is positioned as the preferred supplier for OpenAI's expansion plans, with management indicating that this investment is additive to existing financial guidance, suggesting potential upside to earnings forecasts [3] - Nvidia's market capitalization stands at $4.5 trillion, reflecting its central role in the AI megatrend [3] Strategic Acquisitions and Partnerships - Nvidia continues its aggressive expansion strategy through strategic investments and acquisitions, including over $6 billion in recent deals to strengthen its position in the AI infrastructure market [4] - The acquisition of Enfibia for $900 million addresses critical bottlenecks in AI systems, following a pattern of strategic talent acquisitions similar to those by Meta and Alphabet [5] - Nvidia's $5 billion investment in Intel marks a significant shift in Silicon Valley's power dynamics, with Intel providing x86-based CPUs for Nvidia's AI systems while Nvidia contributes GPU technology to Intel's products [6] Market Dynamics - The partnership with Intel addresses a $50 billion addressable market and positions Nvidia as a major customer of Intel, reversing their historical competitive relationship [7]