Nvidia is in discussions to offer a roughly $250 billion backstop for OpenAI, which is looking to lease a proposed 10-gigawatt data center in southern Ohio. Nvidia shares fell more than 4% on Monday, and the plan counts as yet another example of circular deals within the AI buildout.
Nvidia may lend financial support to OpenAI to help the ChatGPT creator secure access to an enormous data center project being built in Ohio. Late Sunday, the Wall Street Journal reported that Nvidia is in discussions to offer a roughly $250 billion backstop for OpenAI as the Sam Altman-led startup looks to lease a proposed 10-gigawatt data center in southern Ohio.
SB Energy, a subsidiary of Japanese conglomerate SoftBank, is developing that compute facility. According to the Journal, Nvidia's backing would let the developer raise debt at more favorable terms because Nvidia's financial position is much better than that of unprofitable OpenAI.
Nvidia shares fall more than 4%
Nvidia shares fell more than 4% Monday, along with weakness across many semiconductor stocks and other artificial intelligence infrastructure winners. Additional forces could be hitting the group, including AI advancements in China, but the WSJ story is capturing a lot of attention.
Another circular deal in the AI buildout
The concern is that this is yet another example of circular deals within the AI buildout, as Nvidia has invested in a number of companies that buy its chips. That group includes a $30 billion investment in OpenAI earlier this year, an investment in Claude creator Anthropic last year, and multiple so-called neoclouds that rent out Nvidia chips to customers.
Nvidia has said its investments are designed to support the development of the AI ecosystem and offer attractive potential returns, so they are worthwhile uses of cash. The potential $250 billion backstop would cover just the lease and debt to build the data center, not the AI server racks housed inside. However, the WSJ report also noted that Nvidia is in talks to finance OpenAI's chip purchase — something beyond the $250 billion figure.
Hyperscaler spending back under scrutiny
If Nvidia does lend financial support to OpenAI on this SoftBank project, two of the AI boom's most important companies end up tied even closer together. That makes worries about a domino effect understandable, should one party fail to meet its financial obligations.
Alphabet reported strong second-quarter results Wednesday night but saw its stock fall on Thursday due to concerns about increased capital expenditures in 2026 and management's indication that there will be another big step up next year. Meta, Microsoft and Amazon report this week, and CNBC's Investing Club argues all this AI spending needs to show a strong return to soothe investor concerns.
Source: CNBC
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