NVDA & OpenAI: More Promotional Hype
No, NVDA is not investing $100 billion in OpenAI tomorrow or perhaps ever.
The non-binding Letter of Intent (“LOI”), says that NVIDIA (NVDA) may invest “up to $100 billion” in OpenAI and that payments will be made as systems are deployed. NVDA has essentially announced that it may write big checks in the future to its largest customer in an effort to keep the hype train moving. Feels like left pocket, right pocket to me.
My view is that this press release is designed to perpetuate the AI bubble. During my M&A days, never in a million years would I have suggested we issue a press release announcing we signed an LOI because we signed LOIs frequently and they meant nothing. Deals aren’t done until the money is wired.
In today’s equity market where anything flies, including rounding up OpenAI’s approximately 700 million users to one billion, companies get credit for everything, including issuing bullshit press releases announcing LOIs. Companies get away with this nonsense because everyone wants to believe. I can promise you that the Oracle (ORCL) / OpenAI deal will either get downsized, pushed out indefinitely, or cancelled outright. Bet my life conviction on that deal. However, not surprising as Larry Ellison and Sam Altman are two of the all-time least trustworthy Tech founders. My view is that this NVIDIA deal is equally unlikely to be fulfilled to the max amount.