Nvidia’s Huang says he’s surprised AMD offered OpenAI 10% of company in ‘clever’ deal

Background

Recently, a wave of ‘circular investments’ among major U.S. technology companies has raised renewed concerns in the market about a potential AI bubble. In May, Oracle purchased USD 40 billion worth of NVIDIA GB200 chips to meet OpenAI’s massive computing demand. In early September, OpenAI signed a USD 300 billion, five-year cloud and computing capacity agreement with Oracle, starting in 2027. By mid-September, NVIDIA announced a USD 100 billion investment in OpenAI to support the construction of 10GW AI data centers using NVIDIA’s chips. In recent days, reports also surfaced of a collaboration between OpenAI and AMD, under which OpenAI committed to procure 6GW worth of AMD chips and obtained the right to purchase up to 160 million AMD shares at USD 0.01 per share—representing up to 10% of AMD’s equity if fully exercised. In addition, NVIDIA confirmed plans to take part in the latest fundraising round for Elon Musk’s AI startup, xAI, to help build AI data centers powered by NVIDIA chips.

Commentary

The market is both excited and concerned about this web of cross-investments among tech giants. NVIDIA’s large-scale collaborations with leading AI software companies aim to expand AI infrastructure and computing capacity, further cementing its dominance in the global AI ecosystem and securing future chip demand, while also positioning NVIDIA to capture returns as an investor.

The growing synergy between hardware suppliers and software developers opens new opportunities and imagination for investors in the AI space. However, concerns persist that the situation could mirror the dot-com bubble of the early 2000s, when excessive financial leverage led to a disconnect between capital inflows and actual business growth or profitability. With U.S. equity valuations already at elevated levels, investors remain cautious about potential overheating in AI-related investments.

We believe the ongoing cycle of mutual investments among technology firms warrants continued attention. It is crucial to monitor whether the real growth in AI computing power keeps pace with the capital being deployed. Investors should aim to participate prudently in the upward momentum driven by AI innovation, while remaining vigilant against the risk of an emerging investment bubble.