Nvidia stock slips amid report of OpenAI plan for AI chip development

Microsoft-backed OpenAI is looking to reshape the global market for AI-powering chips and processors.

Feb 10, 2025 - 13:15

Nvidia stock slips amid report of OpenAI plan for AI chip development

Nvidia shares edged lower in early Monday trading following a report that suggested OpenAI, the Microsoft-backed creator of ChaptGPT, is looking to design its own AI-powering chips as it plans its next phase of expansion.

Hyperscalers and chatbot creators are looking to spend billions over the next two to three years developing their data centers and training and deploying their large-language model systems with new AI technologies.

That goldrush has put Nvidia, which holds a commanding lead over its rivals in terms of AI chips and processors, in pole position to both reap the benefits but also to control pricing levels in one of the tech sector's most important markets.

However, DeepSeek's emergence as an AI player that established its presence with cheaper, lower-end chips and a focus on more efficient 'distillation' techniques has raised questions over the tech sector's reliance on Nvidia products.

The world's biggest tech companies are looking to reduce their reliance on Nvidia for AI-powering chips and processors.
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Capacity issues, as well, tied to the surge in AI demand have held back gains at Microsoft's (MSFT) Azure, its flagship cloud division, as well as Amazon's (AMZN) Amazon Web Services.

Both companies have been investments in in-house alternatives, with Amazon developing the next generation of Trainium chips and Microsoft building ais own silicon for Azure using technology from Arm Holdings (ARM)

OpenAI going in-house?

Reuters reported Monday that OpenAI is following suit, and will finalize its first in-house design, in collaboration with Broadcom (AVGO) , for fabrication at chipmaker Taiwan Semiconductor Manufacturing later this year and a mass production targeted for 2026.

OpenAI is also raising billions to fund its share of the Stargate joint venture unveiled by President Donald Trump last and agreed to a smaller pact with SoftBank Group, called SB OpenAI, that includes a $3 billion annual payment to uses its AI technology.

SoftBank is also reportedly in talks to lead a $40 billion funding round for OpenAI that would value the group at more than $300 billion.

That could help fund the near $1 billion overall cost tied to developing an successful AI chip and the software and technical gear required to deploy it.

OpenAI CEO Sam Altman, meanwhile, has been seeking to convince the world's biggest investors, including the United Arab Emirates, to commit potentially trillions of dollars as part of a global effort to reshape the AI landscape through a massive expansion of the production of chips and processors

Nvidia earnings up soon

Nvidia, which reports its fourth quarter results after the close of trading on Feb. 26, will be certain to address both DeepSeek's impact on the broader AI landscape, its expectations for a share of the $325 billion committed by the biggest hyperscalers and the growing growing presence of rivals like Broadcom, Marvell (MRVL) and Advanced Micro Devices (AMD) .

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Nvidia shares were last marked 0.12% lower in premarket trading to indicate an opening bell price of $129.64 each.

Broadcom shares, meanwhile, jumped 2.45% to $230.39 each while AMD nudged 0.6% higher to 108.16 each..