Wall Street Is Obsessing Over Nvidia's $105 Billion Circular Financing Structure With OpenAI. Here's the More Important Deal No One Is Talking About.

Key Points Nvidia is pledging up to $105 billion in residual guarantees for OpenAI's Ohio data center project. Nvidia also announced it is acquiring open-source model platform Hugging Face for $12.9 billion. OpenAI and Hugging Face represent two very different opportunities for Nvidia's AI empire. 10 stocks we like better than Nvidia › Nvidia (NASDAQ: NVDA) sits at the center of two very different bets on artificial intelligence (AI) infrastructure. One side of the equation is loud and already consumes Wall Street's attention: a deepening commercial and financial partnership with OpenAI. The other side is quieter and much easier to miss: a reported agreement to acquire Hugging Face , a website where open-source AI models are published and shared. The Nvidia-OpenAI relationship builds and fills AI factories. With Hugging Face, Nvidia can own something far more lucrative -- the marketplace where AI factories get their orders. Let's break down both deals and explore what's at stake for Nvidia investors. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Image source: Nvidia. Nvidia's relationship with OpenAI bridges compute and credit In February, OpenAI conducted a funding round that raised $110 billion at a $730 billion pre-money valuation. During that round, SoftBank and Nvidia each invested $30 billion, while Amazon committed $50 billion. More recently, SoftBank's SB Energy announced that it plans to build a data center at PORTS-Pike Technology Campus in Pike County, Ohio, and lease the facility to OpenAI. The initial build-out plan covers 4.25 gigawatts of capacity, with an option for an additional 3.75 gigawatts. Nvidia will be the exclusive compute supplier as capacity comes online in 2028. According to an 8-K filing in late August, Nvidia entered into a series of residual value guarantees for up to $105 billion to help finance this infrastructure. On the surface, this deal might look like a home run for Nvidia. But think about this for a minute: OpenAI needs graphics processing units (GPUs) from Nvidia to train its models. At the same time, OpenAI is hemorrhaging cash . So now, Nvidia is stepping in as a financier to bankroll OpenAI's infrastructure roadmap so that OpenAI can, in turn, buy more chips from none other than Nvidia. Unsurprisingly, Wall Street is skeptical of the mechanics, with some calling this financing arrangement too circular. Nvidia CEO Jensen Huang and CFO Colette Kress both addressed this concern during the recent fiscal 2027 second-quarter earnings call. Huang described the arrangement with OpenAI as a way to lock in demand for Nvidia compute so OpenAI can build productive AI factories that can be "upgraded repeatedly." Kress went even further, saying that the downside risk from the OpenAI financing is limited because demand from frontier labs is so strong that they create entirely new businesses and ecosystems for Nvidia. She stated that "equity returns on our invested capital will be excellent." Nevertheless, Wall Street still sees a supplier helping one of its core customers finance the very buildings that will be packed with that same supplier's hardware -- a loop that undoubtedly makes credit desks skittish. A transformative acquisition smart investors won't overlook While the arguments around Nvidia's tie-up with OpenAI echo, recent reports suggest that Nvidia is acquiring Hugging Face for $12.9 billion. Despite its funny name, Hugging Face is not some sort of mysterious AI start-up. It's really just a public library and developer workshop unified under one roof. Developers who train AI models don't keep them hidden on private laptops. Instead, they can upload them to Hugging Face in much the same way a programmer can upload code to GitHub. This makes it easier for other developers to find, download, improve, and publish their own versions of the same model -- making Hugging Face a natural resource for sharing AI development work instead of starting from scratch. Why is the Hugging Face deal more important than the OpenAI partnership? With OpenAI, Nvidia gets a single enormous customer and years of exclusive capacity at one data center location. It also increases the chipmaker's customer concentration risk. OpenAI and many of Nvidia's largest customers are already exploring custom silicon designs. A guarantee on one campus in Ohio does not mitigate that risk entirely. It only ensures that those particular buildings will be full of Nvidia's hardware. Hugging Face is a completely different kind of asset that strengthens Nvidia's entire ecosystem. CUDA is Nvidia's software layer, and includes an extensive library of tools that let programs use the full parallel-processing power of the company's GPUs. Nvidia's tight integration between its chip architectures and CUDA creates a legitimate lock-in with developers. This is more valuable than any single contract. If Nvidia owns the domain where open-source models are most commonly posted, discovered, and turned into productive applications, it gains visibility into which models are actually winning. From there, Nvidia can fine-tune its hardware and software for the workloads that are shipping. While closed-system labs can try to switch to competing platforms, the open-source world is far more fragmented and already largely lives on Nvidia's architecture. Owning the sharing layer is how Nvidia can keep its competitive moat. The OpenAI partnership comes with an enormous order for chips that have not been installed yet because the facility they're headed for hasn't been built. In contrast, acquiring Hugging Face provides Nvidia a faster path to own the marketplace that will determine which chips get ordered as new frontier labs join the current generation's leading platforms. In my view, this is why the Hugging Face deal provides a longer-runway opportunity for Nvidia. Should you buy stock in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $435,803 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,577 !* Now, it’s worth noting Stock Advisor’s total average return is 966 % — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 2, 2026. Adam Spatacco has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy .

Nvidia is pledging up to $105 billion in residual guarantees for OpenAI's Ohio data center project.

Nvidia also announced it is acquiring open-source model platform Hugging Face for $12.9 billion.

OpenAI and Hugging Face represent two very different opportunities for Nvidia's AI empire.

Nvidia (NASDAQ: NVDA) sits at the center of two very different bets on artificial intelligence (AI) infrastructure. One side of the equation is loud and already consumes Wall Street's attention: a deepening commercial and financial partnership with OpenAI. The other side is quieter and much easier to miss: a reported agreement to acquire Hugging Face , a website where open-source AI models are published and shared.

The Nvidia-OpenAI relationship builds and fills AI factories. With Hugging Face, Nvidia can own something far more lucrative -- the marketplace where AI factories get their orders. Let's break down both deals and explore what's at stake for Nvidia investors.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

In February, OpenAI conducted a funding round that raised $110 billion at a $730 billion pre-money valuation. During that round, SoftBank and Nvidia each invested $30 billion, while Amazon committed $50 billion. More recently, SoftBank's SB Energy announced that it plans to build a data center at PORTS-Pike Technology Campus in Pike County, Ohio, and lease the facility to OpenAI.