Nvidia's OpenAI deal adds to a brewing concern. But will that actually hurt the stock?

By Emily Bary and Britney Nguyen

An analyst notes some investors are increasingly worried that Nvidia is investing in companies that then purchase its chips. But he also notes the demand landscape looks strong for now.

Nvidia will invest $100 billion in OpenAI.

Nvidia Corp.'s new deal with OpenAI has been well received on Wall Street, with analysts' estimates moving higher and the stock clinching a new record.

The company said on Monday that it would invest $100 billion in OpenAI, which will make use of 10 gigawatts of Nvidia (NVDA) systems. Admittedly, the details of the arrangement are still murky, with the companies declining to share specifics about how the ramp will be timed. That said, Evercore ISI analyst Mark Lipacis is boosting his Nvidia revenue estimates by $5.5 billion for the second half of calendar 2026.

But under the surface, some fears are brewing. The deal sparked memes on X from users who noted that OpenAI reportedly struck a large deal with Oracle Corp. (ORCL) for cloud services, setting Oracle up to buy more chips from Nvidia, which then invested in OpenAI.

Meanwhile, even as he stayed bullish on Nvidia's stock, Bernstein analyst Stacy Rasgon acknowledged that the arrangement with OpenAI "will clearly fuel 'circular' concerns."

"It should be noted that 'circular' concerns have already been raised for [Nvidia], for example having the company investing in (smaller) startups that subsequently buy [Nvidia] chips, or reselling cloud services built upon GPUs sold specifically for that purpose," he wrote, referring to graphics processing units.

See also: Why Nvidia's $100 billion investment in OpenAI signals a major transformation

The new deal with OpenAI "will likely fuel these worries much hotter than what we have seen previously, and (perhaps justifiably) raise concerns over the rationale behind the action, though the company (perhaps unsurprisingly) told us that the investment money will not be used for any direct purchases of Nvidia products," he wrote.

Bank of America analysts, led by Vivek Arya, said Nvidia stands to make a three- or five-time return on its investment in OpenAI, or about $300 billion to $500 billion in revenue, over time.

But Arya's team raised another investor concern on the optics of Nvidia's massive investment in one of its customers, that's likely to last "until [Nvidia] clarifies the appropriate accounting treatment."

Will those concerns hit the stock? Rasgon said the demand picture seems healthy at this stage.

"For now though the news is likely to be taken positively for [Nvidia] as it will further help numbers into 2026 and likely beyond, and the first deployment doesn't happen for a year so incremental worries around sustainability don't seem to present any imminent threat for now," he said.

And Evercore's Lipacis implied that investors still could be underestimating Nvidia, even with the stock at record levels.

He boosted his price target to $225 from $214 after Monday's close and said that Wall Street's estimates for the company look to be too low. The company's deal with OpenAI only makes him more confident.

Lipacis's sense is that "many investors" see a "potential bubble" as Tier 1, 2 and 3 hyperscale cloud providers boost their capital expenditures. But he thinks the opportunity is worth the risk, especially with the stock trading below its nine-year median forward price-to-earnings ratio of 36, he noted.

Don't miss: Google, Meta and Amazon are facing an expensive AI risk that nobody is paying attention to.

-Emily Bary -Britney Nguyen

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09-23-25 1934ET