Thursday, October 2, 2025 5:00 AM EDT
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Nvidia (NVDA) is set to make a massive strategic investment of up to $100 billion in OpenAI to fund new data centers with a required minimum capacity of 10 gigawatts. This partnership highlights the immense capital needed for the race to artificial general intelligence.
The total projected cost for the necessary computing power is nearly $600 billion, with a significant chunk around $350 billion likely going back to Nvidia for its specialized chips. The market reacted positively sending Nvidia’s shares up nearly 4% and reinforcing its status as the world’s largest company, with a market capitalization exceeding $4.5 trillion. OpenAI remains the most valuable private company, valued at close to $500 billion, though achieving profitability with its 700 million monthly ChatGPT users remains a key challenge.
Is This Sustainable? A Look at the Potential Bubble Concerns
The investment has fueled concerns regarding its structure, drawing comparisons to the vendor financing practices of the dot-com bubble. Critics argue that these large investments are designed primarily to guarantee demand for Nvidia’s chips and inflate valuations, potentially creating an AI bubble.
Nvidia is part of a broader trend however, Microsoft (MSFT) and Amazon (AMZN) have also made huge investments on AI startups that utilize their cloud services with Microsoft investing in OpenAI, and Amazon investing in Anthropic. Crucially the dominant players today are highly profitable, cash-rich mega-cap companies investing hundreds of billions to maintain their lead. They view the risk of underinvesting in artificial general intelligence a technology that could deliver immense productivity gains as far greater than the risk of overspending.
Participating In and Diversifying Your AI Exposure
While this investment wave will undoubtedly create winners and losers, the positive impact of AI on certain businesses is already evident. This explains the recent broadening of the AI trade beyond the Magnificent 7 stocks, with companies like Palantir (PLTR) and Oracle (ORCL) showing strong performance too. To mitigate the risk inherent in individual company investments, investors may consider gaining diversified exposure to AI beneficiaries through ETFs.
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