The recent pullback in Nvidia NVDA stock was short-lived, recouping a 4% dip in the last few weeks to re-hit a 52-week peak of $184 a share in Monday’s trading session after announcing it will invest up to $100 billion in OpenAI.
The surprise announcement comes as some analysts have framed OpenAI and Nvidia as being in a budding rivalry regarding the infrastructure layout for artificial intelligence.
To that point, OpenAI’s latest large language models (LLMs) were trained on Nvidia’s H100 GPUs and optimized on the chipmaker’s CUDA (Compute Unified Device Architecture) platform, but the ChatGPT creator has recently tapped Broadcom AVGO to help co-design its own custom AI chips.
However, in a push to keep its AI chips and systems in use by the most innovative companies, Nvidia founder and CEO Jensen Huang stated the investment and infrastructure partnership with OpenAI marks the next leap forward.
Subsequently, many of Nvidia’s AI infrastructure partners also saw their stocks rip higher in Monday’s trading session, including CoreWeave CRWV, Dell Technologies DELL, and Oracle ORCL, among others.
Nvidia & OpenAI are Sparking the AI Industrial Revolution
As one of the largest, if not the largest, tech investments in history, Nvidia will allow OpenAI to accelerate the deployment of its next-gen models on the path to artificial general intelligence (AGI).
Lucrative for both companies, Jensen Huang stated that computing demand has been through the roof for AI, with ChatGPT being the most revolutionary AI project in history, utilized in every industry and country around the world. Regarding AGI, the goal of the partnership is to build an AI infrastructure that further excels AI in real-world applications.
The deal allows OpenAI to deploy and build at least 10 gigawatts (GW) of AI data centers that will be powered by Nvidia’s systems, translating into millions of its GPUs at work. Putting 10 gigawatts in perspective, New York City’s peak electricity demand hovers around 10-11 GW.
The first gigawatt of capacity is expected to go live in late 2026, using Nvidia’s upcoming Vera Rubin platform, a cutting-edge AI infrastructure system designed to power the next gen of massive-context AI applications.
Will OpenAI go Public?
Notably, OpenAI CEO Sam Altman sees Nvidia’s infrastructure investment as being crucial to building out better AI models that provide more complex services. Most importantly, the partnership will help alleviate compute restraints that OpenAI and the broader AI industry have been facing, driving revenue and meeting unsatisfied demand.
At the moment, OpenAI is currently the highest valued company in the private market with a valuation of around $500 billion and already near the benchmark S&P 500’s average of $775.42 billion. Nvidia currently holds the title of highest valued company in global public markets with a market cap of over $4.2 trillion.
Image Source: Zacks Investment Research
As more capacity becomes available, many pundits believe OpenAI could have the first trillion-dollar IPO, with ChatGPT having around 700-800 million weekly active users. Although OpenAI is actively exploring a path to launching its IPO, it hasn’t committed to a specific timeline.
Encouraging what would be perhaps the most anticipated IPO ever, it’s noteworthy that CoreWeave has been one of the hottest IPO’s this year, with CRWV up a blazing +200% since going public in late March. At the end of Q2, Nvidia’s equity stake in CoreWeave was valued at approximately $3 billion, and the chip giant has also signed a $6.3 billion deal to purchase the specialized AI infrastructure provider’s residual unsold cloud capacity through April of 2032.
Image Source: Zacks Investment Research
Nvidia’s Undervalued & Emerging AI Partners
While often overshadowed by some of its larger AI partnerships, Hewlett
Packard HPE is delivering full-stack AI infrastructure for enterprise and industrial use with Nvidia. Hewlett Packard and Nvidia have jointly developed the HPE Private Cloud AI, a turnkey platform validated by Nvidia’s enterprise AI factory framework.
What stands out most about Hewlett Packard stock is its affordable price tag and attractive valuation, at under $30 a share and 13X forward earnings. In contrast, CoreWeave, Dell, and Oracle stock all trade over $100, although Dell shares are also trading at an enticing 13X forward earnings multiple compared to Oracle’s 45X.
Image Source: Zacks Investment Research
As for CoreWeave, the company isn’t profitable yet, but its rapid top-line expansion has compelled investors, with Applied Digital APLD starting to stand out in this regard as well.
Having a strategic partnership with Nvidia focused on building high-performance AI infrastructure, Applied Digital operates next-gen datacenters which provide power to blockchain infrastructure and support high compute-performance.
Interconnecting Nvidia’s broader strategy to dominate AI infrastructure, Applied Digital has a $7 billion, 15-year lease with CoreWeave at two massive data centers in North Dakota, with capacities of 100 megawatts (MW) and 150 MW, respectively.
Applied Digital stock spiked nearly +20% on Monday to a new 52-week high of $24 a share. Astonishingly, over the last decade, APLD has now skyrocketed over 23,800%, being one of the few stocks near Nvidia’s unprecedented return of almost 31,000%.
Image Source: Zacks Investment Research
Bottom Line
Thanks to its strategic partnerships, Nvidia’s success has continued to lift the broader indexes, with the Dow Jones, S&P 500, and the tech-centric Nasdaq hitting their third consecutive day of fresh records. Furthermore, a strategic partnership with the leading chipmaker and highest valued company in public markets could very well lead to OpenAI being the first trillion-dollar IPO.
Free Report: 3 Software Stocks Poised to Skyrocket
Software stocks are poised to catapult higher in the coming months (and years) thanks to several factors, especially the explosive growth of AI. Zacks’ urgent report reveals 3 top software stocks to own right now.
Access the report free today >>
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
Applied Digital Corporation (APLD) : Free Stock Analysis Report
CoreWeave Inc. (CRWV) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
