Nvidia announces $100B investment to help power OpenAI's new AI models

Sept. 23 (UPI) — Nvidia said it would invest as much as $100 billion as part of a strategic partnership that will see the chipmaker deploy huge processing firepower to help train and run OpenAI’s new generation of AI models, the next milestone on the road to “superintelligence.”

Under the tie-up, the investment will enable OpenAI to progressively build and roll out at least 10 gigawatts of AI data centers powered by Nvidia systems, equivalent to millions of Graphics Processing Units for the next generation AI infrastructure, the firm said in a news release.

“Nvidia and OpenAI have pushed each other for a decade, from the first DGX supercomputer to the breakthrough of ChatGPT. This investment and infrastructure partnership mark the next leap forward — deploying 10 gigawatts to power the next era of intelligence,” said Nvidia founder and CEO Jensen Huang.

OpenAI co-founder and CEO Sam Altman said it would advance so-called “compute infrastructure “– the computing power and resources used to train and run machine learning — that will fuel economic growth in years to come.

“Everything starts with compute. Compute infrastructure will be the basis for the economy of the future, and we will utilize what we’re building with Nvidia to both create new AI breakthroughs and empower people and businesses with them at scale,” said Altman.

The news sent the stock market higher, with the feel-good rally feeding into the share prices of semiconductor firms in the United States and around the world.

Shares of Nvidia contract chip supplier Taiwan Semiconductor Manufacturing ended Tuesday up 3.5% on the Taipei Exchange in Taiwan, South Korea’s SK Hynix, which makes memory chips for Nvidia, gained 2.5% on the Korea Exchange.

High-bandwidth chipmaker Samsung, which has yet to supply its memory chips to Nvidia — something investors are banking will happen very shortly — saw its share price rise by 1.4%.

Over in Europe, ST Micro, Infineon and BE Semiconductor shares were up 3%, 2.7% and 3.1% respectively, but stock prices were initially softer due to a revenue warning from semiconductor equipment maker ASM International.

In a note to clients, ODDO equities research head Stephanie Houri said the strengthening of the ecosystem around AI was especially helpful to European companies that provide the machinery to make chips at the cutting edge of what is achievable, such as ASMI and sister company ASML.

ASML makes lithography systems that use light to transfer a circuit template onto silicon wafers, which form the basis for all semiconductors.

British wealth management company Quilter Cheviot told CNBC that the developments in the sector would ultimately help float all boats.

“Ultimately, this is a broad market with lots of suppliers. It certainly isn’t a zero-sum game with only one winner, and indeed it appears investors are recognising that,” said Ben Barringer, the firm’s global head of technology research and investment strategist.

“While this deal may be negative in the short-term for Nvidia’s competitors, it is a sign that the AI trade is a alive and well,” Barringer said.