Jensen Huang says Nvidia is pulling back from OpenAI and Anthropic
techcrunch.com

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158 points

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jnord

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6 hours ago

73 comments

whynotminot ・ 4 hours ago

As long as both companies remain stable and viable, there's probably limited upside to pouring more money into them. If they fail, and bring down the AI ecosystem with them, that is very bad news for Nvidia. So they've been there nurturing their success and providing capital to backstop their exponential growth.

You can see Nvidia stepping in throughout the ecosystem with confidence boosting investments where needed. They haven't just supported Anthropic and OpenAI.

If OpenAI and Anthropic succeed, and get their business fly-wheels fully spinning, they don't necessarily need more capital from Huang. Ultimately the goal of Nvidia is to profit from their long-term success by selling them GPUs for a long, long time. The goal isn't to keep plowing money into them forever.

  • vessenes ・ 37 minutes ago

    Agreed. I will add NV has product dominance - they don’t need to buy strategic MFN supplier status - why not deploy capital elsewhere?

  • adventured ・ 3 hours ago

    These days Nvidia has more money than it knows what to do with. They could certainly push $5b+ into each company annually and never miss it. They're tracking toward an astounding $200b in operating income (maybe over the next four quarters if the music doesn't suddenly stop).

    • glimshe ・ an hour ago

      They could buy back stock or, God forbid, pay good old dividends to investors instead of throwing money away.

    • locusofself ・ 3 hours ago

      5 billion doesn't look like much when OpenAI just raised $110b though. And how sustainable is NVDA's immense profits if this bubble actually bursts?

      • Kina ・ 3 hours ago

        It did not raise $110 billion. According to their own SEC filings $35 billion of Amazon’s funding is contingent on “(i) OpenAI meeting specified milestones, and (ii) OpenAI directly or indirectly consummating an initial public offering or direct listing of equity securities in the United States”

      • lelanthran ・ 2 hours ago
        ・ 2 more

        > 5 billion doesn't look like much when OpenAI just raised $110b though.

        Just about all of the AI providers "raises" are a fraction of the reported "raise", like this one.

        They didn't "raise" $100b. They got commitments for $35b, with said commitments being dependent on meeting certain criteria.

        Every "raise of $FOO" I've seen in the past year or two has not resulted in them getting their hands on $FOO in cash to spend.

codemac ・ 3 hours ago

> Nvidia CEO Jensen Huang said his company’s recent investments in OpenAI and Anthropic are likely to be its last in both, saying that once they go public as anticipated later this year, the opportunity to invest closes

ok, sounds obvious

> Nvidia, for its part, isn’t offering much more on the matter

ok, so no more news from nvidia

> Still, a few other dynamics might also explain the pullback..

Wait it's a pullback?

This is terrible reporting, right?

  • vessenes ・ 33 minutes ago

    Almost all reporting is terrible. But yes, this is terrible reporting.

  • bitfilped ・ an hour ago

    This is several investment rounds in so I think it might be fair to say it's a pullback.

_ache_ ・ 12 minutes ago

My bet is Nvidia is using massive AI ability to dictate its investments. And it logically predict that not much (more) investments are needed and it need time to become profitable.

That a signal that nobody should invest more in the IA big companies and now they MUST become profitable soon.

tl2do ・ 5 hours ago

Instead of pouring more money into OpenAI and Anthropic, Nvidia should invest more in expanding production capacity for the RTX 5000 series and future generations. High-end consumer GPU availability is still constrained, especially for the RTX 5090, and street prices remain elevated. Nvidia should come back to the consumer side.

  • wingmanjd ・ 5 hours ago

    Datacenter income for nVidia last quarter was something like 62B vs the gaming market of <4B. While not quite a rounding error, it feels like the gaming market is just too small for them to put more resources toward it for us consumer folks.

    https://nvidianews.nvidia.com/news/nvidia-announces-financia...

    • PenguinCoder ・ 5 hours ago

      It is insanely stupid that '4B' with a B, is 'too small' of an operating space.

      • chii ・ 4 hours ago
        ・ 9 more

        The absolute value is irrelevant - it's the opportunity cost that determines this.

        It doesn't matter if the consumer market is 4T, if the AI market is 60T!

        • mitthrowaway2 ・ an hour ago
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          One strategic reason is to remove oxygen from competitors. Otherwise someone will scoop up the gaming market and put the proceeds into developing technology to compete with NVIDIA in the more lucrative AI space.

          • zihotki ・ 38 minutes ago

            I wonder who is going to fill the gaming market if AI market focused companies would simply outbid them during manufacturing? All available and not yet available manufacture is pivoting to AI market

        • zmgsabst ・ 2 hours ago
          ・ 6 more

          “I wouldn’t pick up $20 if there was $100 on the ground!”

          Most people would pick up both.

          These economic proclamations don’t seem to make sense, when applied to different contexts — which suggests what you’re saying might be folk wisdom rather than sound theory (and greatly over simplifying the problem).

          You’re also discounting ecosystem effects — gaming GPUs driving demand for datacenter and workstation GPUs as hobbyist experimentation turns into industrial usage. We don’t know what would happen if nVidia stopped suppressing the GPU market, because it’s never been tried — nVidia has always viciously undercut their own grassroots.

          • armadyl ・ an hour ago

            > “I wouldn’t pick up $20 if there was $100 on the ground!” Most people would pick up both.

            No, it’s more like there’s a massive pile of both $20s and $100s on the ground. You wouldn’t waste time running between the two, you’d focus on the $100s

          • chii ・ 25 minutes ago

            > Most people would pick up both.

            if you're within reach of both, then it's not a choice, and there's no opportunity cost in picking just one - you'd be taking both.

            If not within reach of both but just one, and you picking one up means someone else might pick up the other, then which would you choose? The other is then by definition, the opportunity cost.

          • saaaaaam ・ 20 minutes ago

            You’re standing on a traffic island in the middle of a busy road. The lights change allowing you to cross. On one side there is a $20 note, on the other there is a $100 note. Which side do you go to first?

          • reppap ・ an hour ago

            The problem is that Nvidia cannot make infinite amounts of chips so they actually can't pick up both.

          • delaminator ・ 23 minutes ago

            If you were carrying heavy shopping in both arms would you stop to pick up a quarter?

            A dollar?

    • SirMaster ・ 3 hours ago

      But so many gamers want to buy GPUs and can’t because they are sold out or won’t because they are super price inflated. Wouldn’t the gaming market be larger if the products were actually available and at their actual MSRP?

      • danpalmer ・ 3 hours ago
        ・ 2 more

        Nvidia can't sell 10x the number of GPUs they sell. As much as the supply issues are discussed, it would likely take them a long time to just double the market. They could try to become the vendor of choice for the PS6/next xbox, but that's a big strategy shift for again maybe double the market, not 10x the market.

        On the other hand right now the market doesn't seem to think that the >60bn of datacenter revenue is going away or even going to slow down _growing_ any time soon. Just adding 10% more revenue there is worth more than doubling their GPU business which they likely can't do.

      • satvikpendem ・ 2 hours ago

        No. Enterprise customers generate vastly more revenue and profit than consumers can.

    • yndoendo ・ 4 hours ago

      That is not substantiable. AI bubble is wealthy hype like a single drop of blood can be used to validate 100 different diagnostic test. Reality is parts per million fails this along with reusable medium. Wealth latches to idiocy.

      Gaming and CAD market are real expectations that latch to reality. Grow the education systems and grow both. So is matrix math, such as hashing.

      AI has reached a state of software issue, not hardware. And the divergence of AI hardware does not equate to CAD and Gaming math.

      • SR2Z ・ 4 hours ago

        How many of the last ten years have had some kind of "temporary" GPU shortage? It was crypto, now it's LLMs, who knows what's next?

        The only winning strategy for these guys is to exploit the market for all it's worth during shortages and carefully control production to manage the inevitable gluts.

      • TheDong ・ 4 hours ago
        ・ 3 more

        > AI has reached a state of software issue, not hardware

        Citation very much needed.

        At the very least, OpenAI seems to believe more and larger datacenters is the path to better models... and they've been right about that every time so far.

        • eitally ・ 3 hours ago

          Moreover, all the frontier labs and hyperscalers are capacity constrained, and will be for the foreseeable future.

        • leptons ・ 2 hours ago

          >OpenAI seems to believe more and larger datacenters is the path to better models...

          Does that mean they produce better slop, or more slop faster?

      • dylan604 ・ 4 hours ago

        Great, when the AI bubble bursts, they can repackage their AI chips into consumer cards! /s

  • returnInfinity ・ 5 hours ago

    And why should a business do that? Limited chip production capacity be spent on most profitable ventures.

    • blitzar ・ 2 hours ago

      You saying they should have gone all in on Crypto mining?

    • bigstrat2003 ・ 4 hours ago

      If I were Nvidia, I would give more attention to consumer GPUs to hedge my bets. When (not if) this AI bubble pops, their AI customers will become worthless to them very quickly as they won't be buying more GPUs. And when that day comes, I would want to still have consumers to sell to, rather than have them all buying from AMD because I ignored them.

      • armadyl ・ an hour ago

        the only way this argument works is if AMD somehow creates GPUs that run circles around nvidia and boxes them out price wise, and at the same them themselves don’t start prioritizing enterprise customers more. otherwise consumers will choose the best performing gpu possible, generally people don’t care about companies turning their backs on consumers in this way

      • bitfilped ・ an hour ago

        Consumer GPUs are too small of a slice of their revenue to matter to them anymore.

    • tl2do ・ 5 hours ago

      I should admit this is partly my personal preference. That said, gaming has been a durable market for decades, and there’s a strong cycle where better chips enable better games, which then drives more demand for better chips.

      • ravst3s ・ 4 hours ago

        That same virtuous cycle works for their data center segment

        Every GW of Blackwell generates more revenue than the entire gaming business does in 1 year.

  • eitally ・ 3 hours ago

    Why would they do that? They launched the DGX Spark last year with multiple hardware OEMs selling flavors of the reference device (Dell, Lenovo, Asus). That contains a desktop-sized Grace Blackwell architecture GPU (GB10), and word on the street is that they're moving into laptops this year. Their market is the same market Apple is pitching the MacBook 5 Pro/Max, too: devs wanting local models. It's not currently a large market, but it's growing quickly. It makes far more sense for Nvidia to build hardware to service this market than to overly focus on their gaming lines. RTX GPUs are sell once. GB-containing consumer devices are "sell once, but then collect recurring revenue when the workloads those developers build hit production on a cloud somewhere."

  • reilly3000 ・ 3 hours ago

    This leaves an opening for Intel to get in the game. Their new lines have a pretty decent value proposition for mid-tier gaming. If they focused on the higher end they would could own it. There is massive latent demand because of the NVidia situation. It’s easier to make money from than the R&D to build the next Blackwell but there is just as much demand for local/private models on the prosumer level.

  • chii ・ 5 hours ago

    nvidia will come back to the consumer side when the AI side stops being as profitable. Right now, it still seems like the margins for AI hardware is way higher than the same consumer product would sell for.

  • Shitty-kitty ・ 2 hours ago

    Nvidia designs chips, it has no production capabilities. Most of their chips are produced by TSMC and memory come from SK Hynix.

  • dev_l1x_be ・ 2 hours ago

    Their model offerings are also need some love.

01100011 ・ 4 hours ago

Nvidia could flip a switch and start competing with former customers. They have the talent, the models, the HW, and they know how to quickly build out DCs.

  • y1n0 ・ 4 hours ago

    That would not go well for nvidia. Why would they want to enter and compete in a market where everybody is losing money? And in so doing alienate the people that make them profitable?

    • eitally ・ 3 hours ago

      They don't, not directly. That's why they've generally been winding down DGX Cloud. However, lots of folks dramatically underestimate their frontier models (Nemotron family), and they license those models (free) for embedding in MANY other, large tech companies' own products and platforms, which either directly or indirectly consume massive quantities of GPU time.

      Nvidia is best known for selling huge volumes of GPUs to the hyperscalers & neoclouds, but I don't think lots of folks appreciate how many GPUs ISVs like Snowflake, Databricks, Teradata, etc consume, too, just by virtue of designing much of their internal products around CUDA & Nemotron.

    • mlyle ・ 4 hours ago

      If those customers end up profitable, it could be tempting for nVidia to vertically integrate.

      I don't think it's as easy as others say, though.

    • estimator7292 ・ 3 hours ago

      Presumably Nvidia would have a significant advantage on hardware costs, and could run custom hardware that the rest of the market will never see

  • creddit ・ 4 hours ago

    They don't have the talent.

    • iso-logi ・ 4 hours ago

      Are you suggesting Nvidia doesn't have talent in the AI industry?

      NVIDIA has released NVIDIA Deep Learning Super Sampling (DLSS) and a Frame Generation model, NVIDIA Super Resolution (VSR) being the most popular/well known models. (DLSS is outstanding technology, despite the sometimes misleading marketing).

      Nvidia has released countless models:

      Alpamayo 1 (Car navigation model) Cosmos-Reason2 (reasoning vision language model) Nemotron 3 (Large Language Model series) Llama-Nemotron (Large Language Model series) Isaac GR00T (VLA Models) Nemotron OCR (Optical Character Recognition models)

      Take a look at their HuggingFace Collections, almost 100 different collections with countless models inside each collection: https://huggingface.co/nvidia/collections

      • __patchbit__ ・ 3 hours ago
        ・ 2 more

        > Are you suggesting Nvidia doesn't have talent in the AI industry?

        nVidia has an open position for system architect, orbital station AI datacenter

        • blitzar ・ an hour ago

          Sounds like you get to sit on the roof all day looking up.

    • rl3 ・ 4 hours ago

      NV has a massive amount of AI talent, and a lot of them have PhDs.

      Are you suggesting they're lacking on the ultra-high-end? That is: 5-10M+ in comp to sign a single researcher/IC; industry rock star territory.

      Major frontier AI labs do tend to have that type of talent in abundance. I'm sure NV has the equivalent when it comes to hardware design. Surely in AI research too, but perhaps not in the same quantities.

  • LarsDu88 ・ 3 hours ago

    That's not how a smart business runs and that's now how Nvidia operates.

    Jensen is smart. He's gone through over 30 years of tech cycles.

    Nvidia actively commoditizes the LLM models. Look at Nemotron. They've avoided making a SOTA model solely to keep the hyperscalers (aka crack addicts) coming back for more GPUs.

    As soon as the bubble bursts, they can release some open weight NemoMambaDiffusiontron and keep folks buying GPUs to run the damn thing.

    It still wouldn't be smart to do so, as this would fall into the common business pitfall of thinking you could easily do the next stack layer of work.

  • paradoxyl ・ 4 hours ago

    And maybe TSMC should make cellphones? If you're higher up the supply chain why go downstream into risk? It's financially irresponsible.

    • stackghost ・ 3 hours ago

      > If you're higher up the supply chain why go downstream into risk? It's financially irresponsible.

      Well, classically, to capture more margin for yourself. In business school they call this Vertical Integration. Samsung did exactly this. AWS too.

  • wood_spirit ・ 4 hours ago

    And they have a moat - they can control the quantity and quality of hardware flowing to their competitions?

  • WithinReason ・ an hour ago

    Competing with your own customers is not a good idea, especially before the bubble pops.

dmix ・ 5 hours ago

A better headline:

Nvidia rushed some investments in both companies just before they went public and are now are just waiting to get paid.

SamDc73 ・ 5 hours ago

The Stargate money didn’t show up I guess, and now the whole gridlock is collapsing?

seydor ・ 34 minutes ago

The important news is that OpenAI and Anthropic are pulling out from NVidia; they are not public companies.

SpicyLemonZest ・ an hour ago

I don't really understand the idea that not investing more money is a "pullback". Have VC norms propagated so far that any company that makes any investment is presumed to be interested in repeated future rounds?

samrus ・ 2 hours ago

Perfectly reasonable from Nvidia's side. But now thats one less way for sal altman to engineer the valuation upwards

feverzsj ・ 2 hours ago

Everyone knows the bubble is bursting.

  • saulpw ・ 39 minutes ago

    Everybody knows that the boat is sinking.