The seemingly unrelenting stream of artificial intelligence (AI)-related headlines extended in a big way on Monday, Sept. 22 when Nvidia (NVDA) and OpenAI unveiled a letter of intent under which the ChatGPT parent will deploy a minimum of 10 gigawatts of Nvidia systems to underpin its AI infrastructure.
Under the terms of the agreement, the chipmaker will invest as much as $100 billion in OpenAI. OpenAi is currently one of the most world’s most valuable non-public companies. As the Nvidia/OpenAI relationship evolves and gains steam, it could open the door to short-term trading opportunities with the Direxion Daily NVDA Bull 2X Shares (NVDU) – an ETF designed to deliver double the daily performance of Nvidia stock.
One of the important tidbits in Nvidia/OpenAI relationship and one that could open the door to opportunity with NVDU going forward is that concerns are allayed that OpenAI isn’t solely dependent on or overtly favoring chips produced by Nvidia rival Broadcom (AVGO). As the two semiconductor behemoths have proven, there’s room for multiple competitors in the AI realm.
NVDU Could Have Some Juice
Give the size and scope of OpenAI’s adoption of Nvidia AI infrastructure, the rollout is likely to be gradual. However, there are potential parallels with older, related agreements.
“We think this partnership fits within the framework of the $500 billion Stargate project, announced in January. OpenAI and its Stargate partners have tremendous aspirations for AI, and Nvidia is cementing its role in these buildouts,” said Morningstar aanalyst Brian Colello.
Not that it was needed, but a case can be made the OpenAI deal is further validation of Nvidia’s AI competencies. These traits underpin the broader investment thesis while inviting opportunity with ETFs like NVDU.
“OpenAI has grown to over 700 million weekly active users and strong adoption across global enterprises, small businesses and developers. This partnership will help OpenAI advance its mission to build artificial general intelligence that benefits all of humanity,” said Nvidia in a statement.
Adding to the allure of Nvidia is that this deal could be viewed as virtuous circle. The chipmaker is investing $100 billion in the AI giant. OpenAI is then essentially becoming a client of the former. Nvidia’s investments in OpenAI may therefore cycle back to the chipmaker; OpenAI will buy Nvidia products.
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