Bank of America reiterates "buy" rating on NVIDIA Corporation (NVDA.US): Investment in OpenAI could bring in up to $500 billion in revenue.

On September 22, local time, NVIDIA Corporation (NVDA.US) and OpenAI announced a partnership, including plans to build a massive data center and NVIDIA Corporation's investment of up to $100 billion in OpenAI. In response to this news, NVIDIA Corporation's stock rose nearly 4% on Monday. Under the agreement, OpenAI will use NVIDIA Corporation's systems to build and deploy at least 10 gigawatts of AI data centers for training and running next-generation models. A source close to OpenAI revealed that the agreement will prompt NVIDIA Corporation to start delivering chips as early as the end of 2026, and the agreement involves two separate but interrelated transactions. The source stated that OpenAI will purchase chips from NVIDIA Corporation in cash, and NVIDIA Corporation will obtain non-controlling shares in OpenAI through investments. The initial $10 billion investment by NVIDIA Corporation in OpenAI will be initiated after the two companies reach a final agreement on OpenAI's purchase of NVIDIA Corporation chips. Regarding this partnership, Bank of America Corp stated that NVIDIA Corporation's $100 billion investment in OpenAI could potentially bring in revenue of up to $500 billion in the future. Analysts at Bank of America led by Vivek Arya stated, "The partnership includes a letter of intent, where NVIDIA Corporation will be involved in at least 10 gigawatts of systems, with the initial phase of NVIDIA Corporation systems targeting the Vera Rubin platform to go live in the second half of 2026. We estimate that this could potentially bring in around $300 billion to $500 billion in revenue in the future, representing a 3 to 5 times return on investment." "Furthermore, more importantly, OpenAI will be partnering with NVDA as their preferred strategic computing and networking partner. Although the agreement does not specify the share, on the surface it appears that this agreement increases the competition risk for other suppliers, including Broadcom Inc. and AMD." Bank of America reiterated its "buy" rating for NVIDIA Corporation and maintained a target price of $215.