Nvidia Mulls OpenAI Investment as Data-Center Report Drags Stock to $197
Nvidia is reportedly in talks to take a financial stake in OpenAI's latest funding round, while a separate data-center report pushed shares to $197.46 at 15.3x forward earnings.
Nvidia Mulls OpenAI Investment as Data-Center Report Drags Stock to $197
NEW YORK, July 27 —
Nvidia is reportedly in talks to invest in OpenAI's latest funding round while a data-center report sent shares sliding to $197.46 on the same day.
- NVDA at $197.46 — stock slumped on the data-center report despite the OpenAI headline
- 15.3x forward P/E on $253.5bn in TTM revenue — a multiple that has compressed sharply from prior AI-cycle highs
- Watch: next data-center revenue disclosure and any confirmed size or terms of the OpenAI stake
What Actually Happened
Two stories landed simultaneously and pulled in opposite directions. The OpenAI investment talks would give Nvidia an equity seat at the table of its most important software customer — something chipmakers almost never do. When a supplier buys a stake in its buyer, it creates related-party transaction dynamics and erodes the arms-length procurement relationship that keeps chip pricing honest. That structural wrinkle rarely gets discussed on earnings calls, but it matters as OpenAI's compute spend scales.
The more actionable story for the next two quarters is the data-center report. That segment has been the engine behind Nvidia's $253.5bn TTM revenue run. Any signal of demand softening or margin pressure there will move the stock far more than any equity line on the balance sheet.
The Catch
The bull narrative is that an OpenAI investment cements Nvidia's position at the center of the AI industry. The bear read is blunter: Nvidia may be buying into its largest customer at a premium valuation precisely when that customer's compute spend is showing early signs of deceleration. A financial investment cannot offset a shortfall in chip revenue.
At 15.3x forward earnings, the stock has already de-rated significantly from the growth multiples it commanded earlier in the AI cycle. That compression typically signals one of two things: decelerating top-line growth or margin uncertainty. The data-center report suggests at least one is in play.
Bottom Line
The OpenAI investment talks are strategically coherent but financially small against Nvidia's scale. The data-center report is what actually moves the stock this quarter. For growth investors, the question is whether data-center revenue is plateauing; for value investors, 15.3x is only interesting if the forward earnings estimate holds. Both questions get answered at the same moment: Nvidia's next data-center revenue disclosure.
Basis Report's full analysis with a BUY rating on Nvidia is available here.
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Nvidia is in talks to make a financial investment in OpenAI as part of OpenAI's latest funding round.