OpenAI and Nvidia Discuss $250 Billion Data Center Funding Deal

OpenAI and Nvidia Discuss $250 Billion Data Center Funding Deal

Nvidia is reportedly in discussions with OpenAI to guarantee $250 billion in data center funding.

That’s according to a report Monday (July 27) by the Wall Street Journal (WSJ), which calls the proposed deal one of the most ambitious to date in the American AI boom.

The guarantee from Nvidia would help OpenAI lease a 10-gigawatt project in southeastern Ohio, sources familiar with the matter told the WSJ. The total cost of the project would come to more than $500 billion, the report added, making it the largest data center project thus far.

Nvidia’s support would allow the data-center developer, owned by Japan’s SoftBank, to raise debt at more favorable terms than it could if OpenAI had no backer, as the private and unprofitable OpenAI has no investment-grade credit rating.

The artificial intelligence company has been in advanced talks to lease the site for several weeks, with Anthropic, Google and Microsoft also showing interest, according to the WSJ’s sources.

Nvidia has already invested $30 billion in OpenAI, and is discussing a deal to fund chip purchases for OpenAI totaling $350 billion, sources familiar with those discussions said. The WSJ notes that this type of “circular funding” arrangements have prompted worries that industry is vulnerable if investor sentiment changes or growth cools at AI companies.

The report added that this data center would be OpenAI’s first as a tenant, bringing it closer to overseeing the infrastructure it now chiefly rents from companies like Amazon and Microsoft.

OpenAI recently increased its spending forecast for computing power from around $600 billion to roughly $750 billion through 2030, the WSJ said, adding that it is not clear how the deal might influence those numbers.

The proposed deal is happening as data center construction is facing increasing pushback from the American public, as PYMNTS reported earlier this month.

Earlier this month, New York placed a one-year moratorium on construction of new data centers, the first state-wide ban of its kind. Maine’s legislature had approved a state-wide ban, bit it was vetoed by Gov. Janet Mills. Minnesota, Michigan, Pennsylvania, South Carolina, New Hampshire and Virginia are all currently considering similar legislation, according to an analysis from law firm Foley & Lardner.

“If additional states follow suit, New York’s decision could become the beginning of a broader regulatory trend rather than an isolated event,” the analysis said.