Nvidia’s $100B OpenAI Deal Raises Revenue Concerns

Nvidia Corp.’s recent $100 billion investment in OpenAI represents more than just a strategic partnership—it exemplifies a growing concern among market observers. According to Bloomberg, the deal functions as “a way to prop up the market and keep companies spending on its products.” This practice, where Nvidia invests capital into companies that subsequently become major purchasers of its high-value AI chips, creates a circular flow of money that blurs the line between genuine market demand and manufactured revenue. The concern, as highlighted by Bernstein Research analyst Stacy Rasgon, is whether Nvidia’s remarkable revenue growth can be sustained without these carefully structured transactions.

The pattern extends beyond the OpenAI deal. Sam Altman, CEO of OpenAI, has announced an ambitious $850 billion infrastructure expansion, with participation from Nvidia, Oracle, and SoftBank. A CNBC report noted that “those companies are simultaneously investing in the same projects and then getting paid back through chip sales and data center leases.” This creates a scenario where the same entities funding the expansion directly benefit from the subsequent procurement phase, raising questions about the authenticity of the underlying demand driving Nvidia’s record-breaking financial results.

The scale of this potential issue came into sharper focus in August, when Nvidia disclosed in an SEC filing that a significant portion of its revenue was concentrated with just two customers. The company reported that “Customer A” accounted for 23% of total revenue, while “Customer B” comprised 16%, meaning these two unidentified entities were responsible for nearly 40% of Nvidia’s quarterly earnings. All of this revenue was logged within Nvidia’s “Compute & Networking segment,” the core division responsible for its AI chip sales.

The company’s decision not to name these customers in its official filing has drawn attention. While Nvidia could argue that it is simply investing to help companies support transactions they would have made regardless, the opacity surrounding these major revenue sources fuels skepticism. The fundamental question for investors is what would happen if another investor had provided the funding instead. In that scenario, the revenue benefit to that outside investor would be zero, whereas for Nvidia, the investment directly translates into product sales, effectively allowing the company to book revenue from its own capital deployments.

As these deals receive more scrutiny, investors are increasingly forced to ask a difficult question: How much of Nvidia’s revenue growth is organic, driven by independent customer demand, and how much is facilitated by its own strategic investments? The answer, according to industry analysis, is almost certainly that growth would be lower without these circular arrangements. This creates a vulnerability for Nvidia’s stock (NASDAQ: NVDA), which is priced for perfection and reliant on continued hyper-growth.

The practice raises broader market concerns about transparency and sustainable business models. When large tech companies like Oracle and SoftBank participate in funding rounds for ventures like OpenAI’s infrastructure expansion, and then profit from the same ventures through sales and leases, it creates an interconnected web of financial interests that can distort market dynamics. For Nvidia, the risk is that this strategy could be perceived as artificial market prop-up, potentially undermining investor confidence if the true, unassisted demand for its chips fails to meet current expectations.

The coming quarters will be critical for Nvidia. As the company continues to report staggering earnings, the market will be watching closely to see if it can maintain its growth trajectory as these investment-fueled sales cycles mature. The central challenge for management will be to demonstrate that its success is built on a foundation of broad, genuine market demand rather than a complex system of financial engineering that may not be sustainable in the long term.