Deep Water Asset Management Managing Partner Gene Munster said on Monday that Nvidia Corp.’s (NASDAQ:NVDA) multi-billion-dollar commitment to OpenAI marks a pivotal moment in the AI arms race, one that escalates things to a whole new level.
Raises The Stakes For Tech Giants
On Monday, Nvidia committed to investing $100 billion into OpenAI, aimed at deploying 10 gigawatts of NVIDIA-powered systems that to support OpenAI’s next-generation AI infrastructure.
Munster, however, believes that the story is much bigger than this, since the massive investment outlay effectively raises the stakes for every other tech giant. The analyst shared his take in a post on X.
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According to Munster, Nvidia investing in OpenAI effectively creates “more demand for data centers, more demand for cloud compute, more demands [for] AI inference training that basically quickens the pace that all other players are going to have to respond [to],” he said.
He notes that Meta Platforms Inc. (NASDAQ:META) has already signaled a 45% increase in capital expenditures over the next three years, while adding that Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) and Microsoft Corp. (NASDAQ:MSFT) have set modest targets, which be believes will change soon.
“This deal bumps up the bar for the rest of Big Tech,” he said, adding that the September earnings calls from those three companies could provide the “best read” on where the AI investment cycle heads next.
Oracle Shares Surge Amid Deal Clarity
Shares of Oracle Corp. (NYSE:ORCL) surged 6.31% on Monday, outpacing NVIDIA's 3.97% gain. According to Munster, the rally reflects renewed clarity around Oracle's massive $300 billion order contract with OpenAI, which had been questioned and dismissed as overstated last week.
“The substance probability of [the] big contract announced a couple weeks ago from Oracle increased,” Munster said, with NVIDIA set to cover at least one-third of this compute power that OpenAI seeks.
Shares of NVIDIA were up 3.97% on Monday, closing at $183.61, following the announcement of the deal, but are down 0.23% overnight. The stock scores high in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
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