Nvidia Partners with OpenAI in $500B AI Infrastructure Deal

Nvidia's strategic partnership with OpenAI and Oracle to develop AI infrastructure through the Stargate joint venture signifies a robust shift in demand for GPUs and data center capabilities, projecting positive growth for Nvidia's future.

Date: 31-05-2025

AI Rating: 7

Investment in AI Infrastructure: The recent report reveals a significant joint venture comprised of Oracle, SoftBank, and OpenAI, which is set to invest $500 billion into AI infrastructure in the U.S. Nvidia's involvement, specifically in supplying GPUs for the new data center, highlights its positioning in a growing market.

Earnings per Share (EPS): The extensive demand from OpenAI for Nvidia's GPUs under the Stargate project should positively influence Nvidia's earnings. With OpenAI's intentions to expand beyond Texas for its data needs, this positions Nvidia to secure additional sales that may boost its EPS in the upcoming quarters.

Revenue Growth: The report indicates a strong alignment between Nvidia's resources and OpenAI's growing need for compute power, anticipating that Nvidia could benefit significantly from AI infrastructure budgets. Nvidia is expected to see revenue growth directly related to its GPU sales to Oracle and further potential contracts from OpenAI.

Profit Margins: As Nvidia is poised to become a primary supplier through this partnership, it could improve profit margins, especially if the GPU demand plays out as foreseen. While initial costs may be high (with Oracle's GPU acquisition costing around $40 billion), the continual demand might stabilize and even enhance profit margins in the future.

Future Contracts: Nvidia's leading role in supplying GPUs reinforced by its chosen status for Stargate suggests that its position in the AI hardware market may strengthen. Investors should observe Nvidia creating a diversified revenue stream from high-profile contracts, which could further enhance overall stability.

Current Market Sentiment: The discussion around Nvidia reflects a somewhat mixed sentiment, as the stock has faced volatility. However, with a P/E ratio showing valuation compression, professionals may interpret this as an entry opportunity. The commitment from major partners in the AI space suggests bullish behavior for Nvidia, understanding the significant market potential in the AI sector.

Stocks: NVDA ORCL MSFT