BofA Says Nvidia's Deal with OpenAI Poses Competitive Threats to Broadcom and AMD

BofA commented on Nvidia's announcement to invest up to $100B in OpenAI, aimed at enhancing data center deployments and power capacity, with an intent to involve Nvidia in at least 10 GW of systems.

The firm noted that such a significant investment in a customer raises questions until Nvidia provides clarity on the accounting treatment.

Despite these concerns, BofA views it as an equity investment, with OpenAI being treated like any other customer. The firm estimates that this deal could potentially generate $300B-$500B in revenue over time, reflecting a 3 to 5 times return on investment.

Although specific share details were not disclosed, the arrangement poses competitive risks for other suppliers such as Broadcom and AMD. The analyst maintains a Buy rating and a $235 price target for Nvidia shares.