Nvidia plans $250bn push to boost OpenAI ambitions | Technology News

Semiconductor giant Nvidia is reportedly in talks with OpenAI to provide financial guarantees for a data center in Ohio.

A $250bn deal, that was first reported by the Wall Street Journal, would help owner ChatGPT finance a 10 gigawatt project that SB Energy, a SoftBank subsidiary, is building in Piketon, Ohio, 68 miles (109km) south of Columbus, Ohio.

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The project could cost more than $500bn, including the chips that will go inside the data center, and is expected to provide 800 megawatts of electricity by 2028, which is enough to power 640,000 homes.

The power will come from a separate $33bn US government and Japanese natural gas deal.

The $250bn guarantee covers central lending but does not cover central chips, which are worth another $350bn. However, Nvidia’s CEO Jensen Huang said they are also in talks.

In June, The Information He said that OpenAI led by Sam Altman signed a 20-year lease with the AI ​​that manages all of its equipment and payments for the products. The location of Ohio where OpenAI will be located if the agreement is terminated will be a public-private partnership US Department of Energy (DOE) it allowed SoftBank to build the world’s largest AI center on a leased property.

Ohio, with 166 facilities and 57 planned, has the fourth largest operating system in the United States behind Virginia, Texas and California.

The deal could open up OpenAI’s ambitions as it hires from other tech giants, including Amazon, Oracle and Microsoft.

But experts question whether these multibillion-dollar pledges will be profitable for a start-up that is valued at $852bn when it is not profitable and its partners – companies that provide data centers, chips and processing power – had a debt of $96bn as of November.

Financial worries

Critics like Aleksandar Tomic, associate professor at Boston College, said the newly announced deal is the latest example of the money circulating in the AI ​​market distorting what the market needs.

“What’s happening right now with OpenAI and others is that they have a need for computing, but they obviously don’t have the money or funding to support their projects,” Tomic said.

“Nvidia intervenes and provides funds to continue to buy Nvidia chips. Where the demand for the whole chain comes from or where the money is coming from is a big issue.”

In 2025 alone, OpenAI said it will buy $250bn of cloud services from Microsoft, which happens to be one of the biggest AI providers. Also in 2025, Nvidia said it will invest $ 100bn in OpenAI to create data that can use their chips. In early 2026, Nvidia pledged $30bn to OpenAI.

Companies including Nvidia, Microsoft and Oracle have invested billions in AI developers to become the biggest buyers of their computing services, making the same capital across multiple companies, seem like money, according to Tomic.

This is similar to 1999, says Tomic, when companies bought products from each other, making demand appear stronger than it was, which was one of the factors that led to the dot-com bubble.

“Companies can engage in money laundering where they buy each other and make it look like there is more demand for their services than there really is. At some point, the money runs out,” Tomic said.

“In other words, the demand is not as great as it seems because the companies are buying each other, using their money to some extent, unlike OpenAI with a lot of customer demand, making money properly and using customer money to buy Nvidia chips. They are using Nvidia money to buy Nvidia chips.”

Michael Monaghan, founder of the Founder’s ETF, sees things very differently

“Like many things in life, there are obstacles or detours, and it’s a kind of downward spiral. The result is that this is financial. You caught me just after I bought a coffee at my coffee shop, so I’m buying something from him. Then he can take the money and put it in my pocket,” said Monaghan.

This doesn’t mean that money is just a piece of cake. This is just an economy. I understand that there is some problem, but I think there are few things.

Nvidia shares fell 4.9 percent in midday trading Monday after the announcement. Tomic says it points to a bigger problem with Nvidia and chip makers like them.

“If everything is so complicated and everything is ahead of the entire AI universe, why is such a collaboration needed? I think that is what is causing the market jitters because the question is: Why is this important? Tomic said.

Nvidia’s stock is generally on the upswing. It is 4 percent year to date, 11 percent last year and 908 percent over the past five years.

Political pushback

Regardless, data centers across the country have become a political rallying point for candidates left, right and center, which could lead to pressure on future jobs.

new York last week it became the first US country enact a one-year ban on data center construction. At least a dozen other states have passed similar laws even though New York’s law went further.

In Utah on the heels of the state’s general elections, the powerful president of the state Senate lost his election to protect the Republican nomination after supporting a data center supported by investor Kevin O’Leary, losing to an opponent who did not return to the data center.

In Texas, Republican Governor Greg Abbott called in late June to ban the construction of data centers in rural areas. On the other side of the aisle, James Talarico, a Democratic state congressman who is in a tight race with Republican Ken Paxton for a seat in the US Senate in what has been a tight-knit district, unveiled a proposal late last week to block the construction of a data center.

The Democrat’s proposal would eliminate taxes on building data centers in a state that has the second most open and planned data centers in the US, at 466, second only to Virginia.

His proposal would also require operators to pay for the electric grid and give communities a say in whether they want data centers built in their community, which, according to a recent Gallup poll, 71 percent of Americans oppose.

Monaghan doesn’t see political pressure as something that will force companies to cut back or scale back.

“I don’t know if there’s a history of making something big happen. So, in this case, I don’t think there’s a lot of risk to the administration. Using a data center, I don’t see the Luddite version of the world being real.”

Neither OpenAI nor Nvidia responded to Al Jazeera’s request for comment.