What does the disappearance of a $100bn deal mean for the AI economy?
TL;DR
The $100bn deal between Nvidia and OpenAI, announced in September 2024, appears to have collapsed.
Key Points
- The arrangement was circular: Nvidia would fund OpenAI heavily, with most funds flowing back to purchase Nvidia chips.
- The apparent failure raises questions about who will bear AI infrastructure costs and whether the current funding model is sustainable.
Nauti's Take
A $100bn deal that essentially means 'I give you money so you give it back to me' was always Potemkin capitalism. That it's now wobbling is less surprising than the fact it was taken seriously in the first place.
The AI industry has grown accustomed to a funding logic where valuations matter more than business models. If Nvidia and OpenAI are no longer aligned, the question becomes: who actually pays for the next generation of data centers?
Venture capital alone won't cover it, and end customers have yet to see products that justify these sums. Perhaps this wobble is a healthy reality check.
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