{"id":408948,"date":"2026-02-05T08:30:07","date_gmt":"2026-02-05T08:30:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/408948\/"},"modified":"2026-02-05T08:30:07","modified_gmt":"2026-02-05T08:30:07","slug":"what-does-the-disappearance-of-a-100bn-deal-mean-for-the-ai-economy-ai-artificial-intelligence","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/408948\/","title":{"rendered":"What does the disappearance of a $100bn deal mean for the AI economy? | AI (artificial intelligence)"},"content":{"rendered":"

Did the circular AI economy just wobble? Last week it was reported that a much-discussed $100bn deal \u2013 announced last September<\/a> \u2013 between Nvidia and OpenAI might not be happening at all.<\/p>\n

This was a circular arrangement through which the chipmaker would supply the ChatGPT developer with huge sums of money that would largely go towards the purchase of its own chips.<\/p>\n

It is this type of deal that has alarmed some market watchers, who detect a whiff of the 1999-2000 dotcom bubble<\/a> in these transactions.<\/p>\n

Now it seems that Nvidia was not as solid on this investment as had been widely believed, according to the Wall Street Journal. Negotiations had not progressed, with Jensen Huang, Nvidia\u2019s chief executive, privately emphasising that the deal was \u201cnon-binding\u201d and \u201cnot finalised\u201d. Huang appeared to confirm this in Taipei on Saturday, telling reporters that Nvidia would make a \u201chuge\u201d investment into OpenAI\u2019s next funding round, but \u201cnothing like\u201d $100bn.<\/p>\n

A report from Reuters soon suggested that the feeling was mutual: OpenAI was \u201cunsatisfied\u201d with Nvidia\u2019s advanced AI chips, it said, and seeking alternatives. Nvidia\u2019s stock has taken a 10% hit so far this week, a flurry of headlines have ensued and both companies have stepped into damage control.<\/p>\n

\u201cWe love working with Nvidia and they make the best AI chips in the world,\u201d wrote<\/a> Sam Altman, OpenAI\u2019s CEO, on X. \u201cWe hope to be a gigantic customer for a very long time.\u201d<\/p>\n

Even Oracle appears to be shaken: the software company, which is counting on a $300bn cloud computing deal<\/a> with OpenAI, said<\/a> it still expects the startup to be good for its commitment even if it does not receive the full amount from Nvidia. In total, OpenAI has committed to compute deals \u2013 the infrastructure for building and powering its AI tools \u2013 worth more than<\/a> $1tn.<\/p>\n

OpenAI\u2019s ChatGPT is losing ground to competitors. Photograph: Hannibal Hanschke\/EPA<\/p>\n

\u201cThe Nvidia-OpenAI deal has zero impact on our financial relationship with OpenAI,\u201d Oracle<\/a> posted on X. \u201cWe remain highly confident in OpenAI\u2019s ability to raise funds and meet its commitments.\u201d<\/p>\n

That a $100bn deal between two of the most crucial players in AI appears to have evaporated over a weekend is unsettling. But there are solid business reasons behind the apparent shake-up, said Alvin Nguyen, analyst at research firm Forrester.<\/p>\n

OpenAI\u2019s ambitious growth trajectory means it will be difficult for the company to stick with a single vendor, especially as it plans new, computationally demanding AI models, he said. \u201cThey need chips. They need as many as possible.\u201d<\/p>\n

As for Nvidia, its commitment to the $100bn may have been loose in the first place, even as it was widely reported. \u201cThey will not discourage people from overhyping. Why say something and immediately sucker punch your own share price?\u201d<\/p>\n

For a giant startup like OpenAI, manoeuvring in and out of deals \u2013 for example, with chipmakers \u2013 may just be business as usual, said Nguyen: \u201cYou know [Altman\u2019s] background as a startup person, and you know the manoeuvres he\u2019s doing make sense from a startup perspective.\u201d<\/p>\n

For Nvidia, meanwhile, AI hype is part of selling chips. \u201cYou don\u2019t know what\u2019s going to happen,\u201d said Nguyen. \u201cAnd so you let other people put numbers out there for you and let that drive the hype.\u201d<\/p>\n

The issue is, of course, that investors and other companies like Oracle may have taken widely reported $100bn commitments seriously.<\/p>\n

In response to a query from the Guardian, an OpenAI spokesperson referred to Altman\u2019s X post, and to remarks Huang made to CNBC on Tuesday, including: \u201cThere is no drama.\u201d<\/p>\n

The spokesperson added: \u201cOur teams are actively working through details of our partnership. Nvidia technology has underpinned our breakthroughs from the start, powers our systems today, and will remain central as we scale what comes next.\u201d<\/p>\n

Nvidia and Oracle did not respond to requests for comment.<\/p>\n

This is all taking place against the backdrop of a changing investment landscape for AI, where hype is giving way to realities about what aspects of the technology are actually going to earn money.<\/p>\n

While investors ponder whether OpenAI is going to be able to pay for a $1.4tn compute deal, reality is biting further down the AI food chain. This week has seen a massive sell-off in certain software stocks<\/a>, prompted in part by the launch of a new Anthropic AI tool that can carry out a number of professional services, which has led to fears that business models exposed to competition from AI products will be disrupted .<\/p>\n

This is the flip-side of \u201cjagged AI\u201d, which is the term for advanced AI tools having uneven talents, such as being good at sifting through documents but less good at solving complex maths problems. If advanced systems are good at automating legal work, then legacy companies in service industries will suffer. The losers are beginning to emerge and are being picked up by investors.<\/p>\n

At the top of the AI pyramid the competitive effects are also biting. OpenAI\u2019s chatbot, ChatGPT, is losing ground to competitors. Data released on Tuesday<\/a> show its market share has eroded from 69% to 45% owing to the rise of Google\u2019s Gemini, xAI\u2019s Grok and Anthropic\u2019s Claude. OpenAI appears to have retreated from soaring talk of super-intelligence in the past months, focusing instead on profitable mundanities such as adverts and adult content.<\/p>\n

The apparent evaporation of a $100bn deal may be of a piece with last year\u2019s sci-fi rhetoric meeting this year\u2019s practicalities. The question is, who might be left holding the bill?<\/p>\n

\u201cI think there will be knock-on effects,\u201d said Nguyen. \u201cI mean, it\u2019s that statement: the markets can stay irrational longer than you can stay solvent.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Did the circular AI economy just wobble? Last week it was reported that a much-discussed $100bn deal \u2013…\n","protected":false},"author":2,"featured_media":408949,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":{"0":"post-408948","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-technology","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/408948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=408948"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/408948\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/408949"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=408948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=408948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=408948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}