OpenAI Reportedly Plans to Buy Google's AI Chips. Should You Sell Nvidia Stock?

OpenAI plans to acquire Google's artificial intelligence chips, according to a report by The Information on October 27. However, no financial details have been disclosed. As a result, Nvidia's (NVDA -1.18%) stock has not experienced any significant movement. Google's tensor processing units (TPUs) are considered the top alternative to Nvidia's graphics processing units (GPUs), which are predominantly used by OpenAI. Despite this, Nvidia's stock has remained relatively stable.

Should investors consider selling Nvidia stock following this news? I do not believe so. The report conveys a less significant message than its title suggests. It implies that OpenAI is acquiring chips while Nvidia is unable to produce enough of its own. OpenAI has previously utilized Google's TPUs, but OpenAI stated in June 2025 that it was only in the early stages of testing some of them and had no plans to scale them.

The key point is that OpenAI is reportedly buying the chips rather than renting access to them, and Google started selling TPUs directly to customers this year. The report does not mention that OpenAI is reducing its reliance on Nvidia, and OpenAI's commitments to Nvidia remain substantial. In August, Nvidia revealed that OpenAI's current and planned commitments amount to approximately 12 gigawatts of Nvidia computing, with potential growth reaching up to 16 gigawatts by 2030, valued at around $600 billion.

Nvidia also entered into agreements capped at $105 billion to provide parts of the lease and power payments at an Ohio data center campus that OpenAI will lease. This campus will only house Nvidia's AI hardware, with limited exceptions. The report does not provide any specific figures regarding this deal.

Nvidia's primary challenge remains its ability to manufacture sufficient products. On Nvidia's August earnings call, CFO Colette Kress mentioned that the company anticipates a revenue increase of around 70% in fiscal 2028 (covering the period ending January 2028). She referred to this as a supply-constrained outlook, stating that customer forecasts indicate Nvidia's growth could double in the following year.

Nvidia CEO Jensen Huang echoed this sentiment during the same call, emphasizing that Nvidia currently only meets around 70% of demand growth. Moreover, Nvidia has committed to spend $279 billion on memory purchases, nearly tripling its commitments over two quarters. This suggests that Nvidia expects demand to surpass its current manufacturing capabilities.

In a competitive market like this, chips that OpenAI does not purchase from Nvidia might instead go to the next customer in line. However, as supply improves to meet demand, the impact of OpenAI's potential shift to Google's chips may diminish. Oracle announced on Tuesday its intention to offer Google's chips on its cloud starting in 2027, and additional options could further affect Nvidia's pricing.

Nonetheless, Kress believes that supply will continue to be a bottleneck through the end of fiscal 2028. With Nvidia's shares trading around $218, investors pay approximately 14 times the earnings analysts average forecast for Nvidia's fiscal 2028. In comparison, Alphabet's shares cost around 21 times its expected 2027 earnings.

Given the perceived slowdown in Nvidia's growth and increased market share for competitors, I believe the reported plan, without disclosed terms, is not a reason to sell Nvidia stock.