According to analysts, Nvidia’s $100 billion partnership with OpenAI could mark the beginning of a new stock supercycle by securing long-term demand for its chips and strengthening its position at the heart of artificial intelligence infrastructure. But they caution that extended valuations, regulatory scrutiny, and the fact that deliveries will not begin until 2026 could make the rally less straightforward than investors hope.

Key takeaways

• Nvidia stock closed at a record $183.68 after unveiling a $100B partnership with OpenAI.
  
  
• The deal is structured as two transactions: OpenAI will pay Nvidia in cash for chips, while Nvidia will invest back into OpenAI for non-controlling shares.
  
  
• The first $10B tranche will be triggered once OpenAI signs a definitive chip purchase agreement.
  
  
• At least 10GW of Nvidia systems are expected by 2026, with the first 1GW deployed on the Vera Rubin platform.
  
  
• Nvidia has already been part of a $6.6B investment in OpenAI (Oct 2024) and pledged $5B to Intel days before this announcement.
  
  
• Microsoft retains rights to 49% of OpenAI’s profits from its earlier $13B investment.
  
  
• The Magnificent 7 now make up 35% of the S&P 500, while the top 10 stocks represent 41% of market cap.
  
  
• The DOJ and FTC are preparing potential antitrust probes into Microsoft, OpenAI, and Nvidia.
  
  

Nvidia and OpenAI’s deepening partnership

The deal is one of the largest commitments in AI’s history. Beginning in late 2026, Nvidia will deliver data centre chips to OpenAI while also taking a non-controlling equity stake. The two companies signed a letter of intent covering at least 10GW of Nvidia hardware for OpenAI’s next-generation infrastructure - capacity comparable to some national power grids.

The first $10B of Nvidia’s investment is tied to OpenAI finalising chip purchases. While the size of the project guarantees years of demand, the financial benefits will not show up until later in the decade.

OpenAI is also restructuring into a for-profit entity, a move complicated by Microsoft’s claim to nearly half of its profits. Nvidia’s entry adds another influential voice to the governance of one of the world’s most closely watched AI firms.

Why the rally could continue

Nvidia’s rally is supported by its unique dominance in GPUs. As OpenAI pursues superintelligence, it will need unprecedented computing power, and Nvidia is the only firm currently capable of supplying it at scale. Ten gigawatts of capacity locks in demand for years, reinforcing Nvidia’s position as the backbone of AI.

The company has also embedded itself across the wider AI ecosystem. It is a partner in the $500B Stargate project with Microsoft, Oracle, and SoftBank, and days before the OpenAI deal, it pledged $5B to Intel. These alliances ensure Nvidia’s hardware is indispensable in nearly every major AI buildout.

Investor sentiment remains strong. Shares of AMD rose 3%, TSMC gained 4%, and Oracle climbed nearly 5% following the announcement. With OpenAI valued at $500B, Nvidia’s investment signals that capital is still flowing into the sector despite earlier fears of a slowdown.

Why a pullback could loom

There are also significant risks. The most immediate is timing: Nvidia’s deliveries will not begin until late 2026. Markets are rewarding it now for revenues that may not arrive for years, leaving little room for error.

Market concentration raises another concern. The top 10 US stocks now represent 41% of the S&P 500’s market cap, up from 33% two years ago. Nvidia’s surge has only deepened this imbalance, leaving markets vulnerable to sharp corrections if sentiment shifts.

Regulators are also circling. In mid-2024, the DOJ and FTC agreed to coordinate oversight of the largest AI firms, including Nvidia, Microsoft, and OpenAI. Their combined dominance across chips, cloud, and software makes them prime candidates for antitrust action.

Valuation is stretched as well. Nvidia’s $100B commitment exceeds the GDP of many nations, and its market cap already reflects near-perfect execution. Any weakness in AI adoption, profitability, or governance at OpenAI could weigh on its stock.

Finally, geopolitics is an unpredictable overhang. US–China rivalry in semiconductors could result in export restrictions or tariffs that disrupt Nvidia’s supply chain, proving that even dominant firms are not immune to external shocks.

Market reaction

The announcement sparked a strong market response. Nvidia’s stock rose 4.4%, Oracle's nearly 5%, and the Nasdaq Composite added almost 1%. The S&P 500 gained 0.5% to reach a fresh record high. With the Magnificent 7 now making up 35% of the index, Nvidia’s moves are no longer just about one company - they are shaping the broader market.

Technical picture

At the time of writing, Nvidia is in price discovery mode, with shares testing new highs. Trading volume suggests a tug-of-war between buyers and sellers. If momentum fades, support levels lie near $173.40, $168.00, and $164.35. Sustained buying above current levels could extend the rally further into uncharted territory.

Nvidia stock Investment outlook

For traders and portfolio managers, Nvidia’s $100B deal is both an opportunity and a risk flag. In the short term, momentum remains firmly in its favour, with spillover gains for other AI-linked equities. In the medium term, stretched valuations, regulatory uncertainty, and delivery delays could cap upside.

Over the longer horizon, if AI adoption continues as expected, Nvidia could indeed enter a supercycle that redefines equity markets. Yet the same dominance that underpins its rise also ensures it will face scrutiny from regulators and pressure from competitors.