Why Investors Shouldn’t Panic About Nvidia’s Commitments
Talk about a nervous market! Shares of Nvidia fell 5% on Monday on news of a $500 billion partnership the AI chip giant struck with South Korean conglomerate SK Group, along with a Wall Street Journal report that Nvidia was separately in talks to help OpenAI finance a $500 billion data center campus in Ohio. Investors should take a chill pill: Neither of these deals was actually news. Nor were they fully fleshed out.
For instance, Nvidia and SK have only signed letters of intent to formalize a partnership, they said on Friday. Letters of intent are not worth the paper they’re written on. Remember, Nvidia and OpenAI signed a letter of intent last September for what they called a “landmark strategic partnership,” only to abandon the idea a few months later.
Moreover, the SK Group–Nvidia announcement from Friday was mostly a reprise of two other announcements from early June. In one, Nvidia and SK Telecom (a part of SK Group) had announced plans to build a “gigawatt-scale AI Cloud in Korea” using Nvidia’s DSX technology. (Funnily enough, while Friday’s press release linked to that announcement, the latest update doubled the scale of the AI cloud in Korea to 2 gigawatts.) In the other, Nvidia and SK Hynix (another part of SK Group) announced a memory chip partnership. As to details of the $500 billion, such as which company is putting up how much, Nvidia isn’t saying. My colleague Phoebe Liu reported on Friday that executives at a press briefing wouldn’t talk about those details.
Then there’s the OpenAI-Nvidia Wall Street Journal report that drew attention on Monday, which wasn’t news: It was outlined in a report in The Information in early June! As was the case back then, the details aren’t clear. It does imply Nvidia would take on a lot of risk to back OpenAI. But given the history of OpenAI and Nvidia, there’s no guarantee this deal will get done.
Nvidia likes to make announcements. We got two more today, with news that it is investing in Ilya Sutskever’s AI startup, Safe Superintelligence, and helping launch an open-source software cybersecurity alliance. Keeping track of what’s new and meaningful about AI isn’t easy, and the media’s reporting often makes things more confusing by recycling different versions of the same news. But before investors panic about Nvidia’s financial commitments, they need more details about what’s real and new and what’s not.