Wedbush: Nvidia (NVDA.US) “backs” OpenAI with hidden risks, but this is a long-term binding worth betting on

The Zhitong Finance App learned that, according to earlier reports, Nvidia (NVDA.US) is discussing providing a credit guarantee of up to 250 billion US dollars for OpenAI to support the latter in leasing and building a large-scale artificial intelligence (AI) data center campus in Ohio. In response, Wedbush Securities pointed out in its latest report that although this move may pose additional risks to Nvidia, it is generally a positive arrangement to strengthen the long-term strategic ties between the two sides.

According to information, the core of this guarantee arrangement is to enable OpenAI to use Nvidia's credit qualifications to raise huge debt funds to secure the leasing and construction of a 10 gigawatt (GW) data center park in Pike County, Ohio. People familiar with the matter stressed that the guarantee only covers leasing and construction debts, and does not include the Nvidia chip itself — the two sides are in separate negotiations over the supply and financing of the chips. The park was originally a uranium enrichment plant, but now it is being developed by SB Energy, an energy subsidiary of SoftBank, in cooperation with the US Department of Energy. According to estimates, the annual electricity consumption of 10 gigawatts is equivalent to the electricity consumption of 8 million American households, and the total cost of the entire data center park may exceed 500 billion US dollars.

From Nvidia's perspective, Wedbush analyst Matt Bryson (Matt Bryson) wrote in a report to clients that such projects would “further strengthen Nvidia's ties with one of the world's leading cutting-edge model developers,” and help mitigate competitive risks during a period where more foundry production capacity may eventually relinquish market share. But at the same time, he warned: “The revolving financing arrangement will inevitably create more risks for Nvidia, because if AI demand slows down or OpenAI lags behind competitors, Nvidia may be exposed to customer operating problems.”

Despite this, Bryson believes that ongoing large-scale data center construction plans and Nvidia's central position in these projects are positive for the world's largest AI accelerator and hardware vendor. He also specifically mentioned that the project is likely to have received the attention and “support” of the US federal government; after all, “cooperation with this (Trump) administration so far has been very rewarding for chip companies.”

Currently, the capital bond between Nvidia and OpenAI is getting tighter. In September of last year, Nvidia said it would invest up to $100 billion in OpenAI as a strategic partner, provided that the latter would deploy at least 10 gigawatts of Nvidia systems. Although the investment ultimately failed, Nvidia still invested $30 billion in OpenAI's record funding round in March of this year. Since then, Nvidia CEO Hwang In-hoon has stated that this “may” be the company's last investment before OpenAI went public. In June of this year, OpenAI secretly submitted an initial public offering application to the US Securities and Exchange Commission, but has yet to disclose an official schedule. Currently, a number of private investors have valued OpenAI close to $1 trillion, betting that it can maintain its leading position in the AI field and find a sustainable business model — even though open source models from China and the like continue to threaten its pricing capabilities.

As a co-driver of the project, SoftBank is also the main investor in OpenAI, and the two sides announced an investment of 1 billion US dollars in SB Energy earlier this year. This time, the Ohio data center is regarded as one of the most ambitious projects in the US AI infrastructure expansion. As related financing negotiations gradually advance, its final outline and risk exposure of all parties may still change.