Nvidia's early lead in artificial intelligence made it the world's most valuable company, but rivals like AMD and Google have narrowed the technology gap. Now the chipmaker is leaning on a different advantage: its massive cash reserves.
After partnering with Wall Street firms last week to pursue $500 billion in GPU financing, Nvidia announced Monday it will provide up to $105 billion for a large OpenAI data center in Ohio, acting as a financial backstop for the ChatGPT developer. The company's quarterly free cash flow has jumped 18-fold in three years to $48.5 billion, and it has posted 12 straight quarters of revenue growth above 55%.
Nvidia is using that financial strength to fuel AI infrastructure demand, which remains concentrated among a few hyperscalers. The company raised its dividend to 25 cents per share from a penny in May and announced an $80 billion buyback, pledging to return roughly half of free cash flow to shareholders this year. It also holds $30.2 billion in marketable equity securities, up from $12.9 billion a year earlier.
In February, Nvidia invested $30 billion in OpenAI. Monday's deal also includes a $1.5 billion investment in SB Energy, a SoftBank affiliate managing the Ohio site, plus support for about 4 gigawatts of development there, with data centers opening between 2028 and 2030. CEO Jensen Huang said on X that frontier AI labs often grow faster than their balance sheets can support, lacking the long-term contracts and credit capacity to secure infrastructure independently.
A week earlier, Huang announced with Goldman Sachs, Apollo, Blackstone, and BlackRock that GPUs would become a new asset class for third-party investors. Nvidia can backstop 25% of each loan, pushing more of its technology into the market as Google and AMD gain ground — Google's TPU sales helped its cloud unit grow 82%, and AMD's data center business grew over 100%, with its Helios system shipping later this year.
Analysts at Cantor dismissed concerns that Nvidia is simply buying revenue, calling the deal a sign that the AI investment cycle will be durable. Paul Meeks of Freedom Capital Markets said competition pressures Nvidia's margins, pushing it to diversify. AI bulls point to strong demand — Anthropic's annualized revenue run rate hit $65 billion in July, and OpenAI's reached $40 billion. Matthew Vegari of Clearwater Analytics said overcapacity fears are premature: "That day isn't today."
Source: CNBC