Nvidia (NASDAQ:NVDA) shares declined in after-hours trading on Monday, slipping 0.7% following an earlier 2.9% drop during the regular session after media reports that OpenAI is unhappy with some of Nvidia's latest AI chips and has been searching for other suppliers.
According to the report, OpenAI began exploring alternatives last year, with a particular focus on chips optimized for AI inference - the stage in which models such as ChatGPT generate responses to user inputs. While Nvidia continues to hold a leading position for chips used in training large AI models, the inference market has emerged as a fresh area of competition within semiconductors.
The account suggested that the development could put strain on the relationship between two prominent firms in the AI ecosystem, in part because the companies have reportedly held discussions about investment. The news compounded earlier weakness in Nvidia's share price that followed a Wall Street Journal report indicating negotiations for Nvidia to invest up to $100 billion in OpenAI had broken down.
Nvidia CEO Jensen Huang later commented on the situation, saying the company would "absolutely" be involved in OpenAI's current funding round, but he characterized the eventual investment as "nothing like" the previously reported $100 billion figure.
Market participants and analysts reacted to the sequence of reports. Mizuho analyst Daniel O'Regan said: "I think the story hurts sentiment around a key customer of NVDA in OAI."
Taken together, the accounts underscore a potential challenge to Nvidia's dominance in the AI chip market, as significant customers such as OpenAI evaluate alternatives for specific types of AI processing tasks. The situation highlights evolving competitive dynamics in the inference segment even as Nvidia retains strength in training workloads.
Key context and takeaways
- Nvidia shares fell 2.9% in the regular session and a further 0.7% in after-hours trading following reports about OpenAI's dissatisfaction with some Nvidia chips.
- OpenAI reportedly began seeking alternative chip suppliers last year, especially for AI inference workloads.
- Company discussions over a potential Nvidia investment in OpenAI have been reported; Nvidia's CEO confirmed involvement in the current funding round but said it would be "nothing like" the previously reported $100 billion figure.
Implications
The developments call attention to competitive pressure in inference hardware and possible strains in customer-supplier relationships among major AI firms. They also illustrate how investment negotiations and public reports about them can influence investor sentiment and share price moves.