Nvidia will invest up to $100 billion in OpenAI as part of a data centre infrastructure project, the companies announced on Monday.
The chipmaker and artificial intelligence start-up unveiled a letter of intent for a partnership to use 10 gigawatts of Nvidia chips for OpenAI's infrastructure. The first phase would go online in the second half of 2026.
“Nvidia and OpenAI have pushed each other for a decade, from the first DGX supercomputer to the breakthrough of ChatGPT,” said Nvidia chief executive Jensen Huang. “This investment and infrastructure partnership mark the next leap forward – deploying 10 gigawatts to power the next era of intelligence.”
In the US, Nvidia shares were trading more than 3 per cent higher at $183.22 per share during afternoon trading.
As part of the partnership, OpenAI said it will work with Nvidia as a preferred strategic compute and networking partner for its plans in AI factory growth, and that they will collaborate on optimising road maps for OpenAI's model and software and Nvidia's hardware and software.
“Everything starts with compute,” OpenAI chief Sam Altman said. “Compute infrastructure will be the basis for the economy of the future, and we will utilise what we’re building with Nvidia to both create AI breakthroughs and empower people and businesses with them at scale.”
Speaking alongside Mr Altman in an interview with CNBC, Mr Huang said the 10 gigawatts is equivalent to between four to five million GPUS.
The two companies are expected to finalise the details of the new phase of their partnership in the coming weeks. They said the partnership will complement other projects with collaborators including Microsoft, Oracle, SoftBank and partners from the Stargate project.
The announcement comes days after Nvidia announced a $5 billion investment commitment in Intel to co-develop new data centre and PC products.
Nvidia said at the time it would collaborate with Intel to build custom x86 CPUs that Nvidia will integrate into its AI infrastructure platforms.
The US also obtained a roughly 10 per cent stake in Intel for an investment of $8.9 billion to help support the struggling chipmaker, President Donald Trump said last month.
Nvidia, the world's most valuable company with a worth of about $4.5 trillion, has become the darling for investors amid the AI boom. Its stock performance has become a market gauge for the industry.
On Monday, Nvidia's stock jumped about 4 per cent to set a record after the OpenAI deal, showing that “every time you think the AI rally has topped out, it finds another gear”, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Basically, OpenAI will need to buy an enormous amount of Nvidia chips to make this happen, and Nvidia is making sure it has a seat at the table. It’s a genius move,” she said.
“It will not only help them sell more chips to one of the world’s most famous – if not the most famous – AI chatbot makers, but it also ties them closer to OpenAI’s future. Investors loved the idea … and proved again that the company constantly finds ways to co-operate, integrate, navigate political and geopolitical jungles with grace and make its way through.”
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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