Nvidia has turned the headlines around this week and is proving it’s not just a pawn in the U.S./China trade war. It announced an investment into OpenAI worth up to $100 billion to help the company build out data centers. Nvidia began with an initial $10 billion investment, which gives it about a 2% stake in OpenAI, which is valued around $500 billion.

Although Nvidia has said the money won’t be used for “direct purchases” of its own products, this gives OpenAI direct access to Nvidia processors – which it will reportedly lease rather than buy.

Choosing to rent could help it upgrade faster as better-quality chips become available, instead of having to continually replace hardware en masse. However, it also sets Nvidia up with a recurring revenue stream.

Bloomberg writes that some analysts are concerned about the deal, citing potential “circular” financing. The fact that the deal “appears to dwarf all the others,” as a Bernstein analyst writes, will “raise concerns over the rationale behind the scenes.”

Essentially, if Nvidia is investing enormous amounts of cash in its biggest customers, is this creating a bubble? After a jump on Monday, shares fell almost 3% on Tuesday.

OpenAI, under the auspice of Project Stargate, expects to build multiple 10-gigawatt sites, with the first coming online in the second half of 2026. It’s not just chips it’ll need – the sites will also require a lot of power, which it will have to get from somewhere. If the energy revolution doesn’t scale on the same timeline, that could throw a wrench in their plans. 10 gigawatts alone could power multiple cities for a year.

Nvidia is up premarket after yesterday’s slump, this time on very different news.

Worries that Nvidia could be facing a Chinese boycott are also easing with the reports of a deal with Alibaba (BABA). Alibaba, along with several other Chinese conglomerates, previously said it was working on its own proprietary AI chips – and that still is likely the ultimate goal.

In the meantime, Nvidia will reportedly work with Alibaba integrate its tools for physical AI in service of creating robots and self-driving cars. This gets around chip bans on both sides of the aisle, while helping Alibaba develop training models, environmental simulations, and more.

It will be interesting to see if the U.S. government has a response to the deal as it races to stay ahead.

Nvidia’s valuation has soared over the last few years as the AI boom took hold, and it’s clearly using that cash to spur the industry and consolidate its position as a dominant player. However, it must navigate national security concerns for multiple countries, keep up demand for its products, and stay at the technological cutting edge. Investors must decide if this latest flurry of deals and investments will satisfy the market for now.

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