Nvidia to provide up to $105 billion guarantee for OpenAI's Ohio data center

Nvidia has pledged up to a $105 billion guarantee to facilitate OpenAI's construction of a substantial data center in Ohio, owned and developed by a SoftBank subsidiary, SB Energy. This commitment signifies Nvidia's largest infrastructure financing deal thus far. Apart from the $105 billion guarantee, Nvidia will also invest $1.5 billion in SB Energy, following an earlier $1 billion investment from OpenAI and SoftBank to bolster data center infrastructure.

This cooperation exemplifies Nvidia's strategy of funding infrastructure built around its chips, a tactic that bolsters demand but has also sparked debates on potential circular funding flows between the chipmaker and its clients. In recent times, Nvidia's partnership with six major financial institutions including BlackRock to launch financing platforms targeting over $500 billion in third-party funding for AI infrastructure has further spotlighted this issue.

Nvidia CEO Jensen Huang clarified that the new deal is not circular financing and that Nvidia is leveraging its scale and long-term visibility to assist OpenAI in building "AI factories" that can be upgraded repeatedly with each new generation, delivering enhanced intelligence and improved economics. The data center, situated in Pike County, Ohio, will have a capacity of up to 8 gigawatts, with the initial 800 megawatts slated for completion in 2028.

OpenAI will lease the site for a span of 20 years. The financing structure remains undefined and is anticipated to consist of equity, potentially raised through a possible SB Energy IPO and direct investment by SoftBank. A debt portion, likely comprising project finance loans and possibly public debt like bonds, will also be included, once the total equity amount is determined.