Why Nvidia Stock Popped Monday

Key Points

• A “monumental” new deal between Nvidia and OpenAI has investors excited.

• Nvidia will be a huge beneficiary of its own investment.

• Investors can expect its strong revenue growth to continue.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has seen explosive growth for its advanced semiconductor chips. The artificial intelligence (AI) leader made a major announcement today that will supplement that growth.

Nvidia and AI research organization and ChatGPT developer OpenAI have created a new strategic partnership that could be a win-win for both companies. That helped Nvidia’s stock surge as much as 5.3%. As of 2:10 p.m. ET, shares were 3.4% higher than Friday’s closing price.

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Image source: Nvidia.

Did Nvidia just invest in itself?

Nvidia said it will invest as much as $100 billion in OpenAI. But in reality, that money will turn right around to become revenue for Nvidia. The companies said the $100 billion will be used by OpenAI to establish and deploy data centers for OpenAI’s next-generation AI infrastructure. The AI data centers will run at least 10 gigawatts (GW) of compute power utilizing millions of Nvidia graphics processing unit (GPU) systems.

The systems will train and run OpenAI’s next generation of models. Nvidia CEO Jensen Huang called the deal “monumental in size.” Huang said the 10 GW is equivalent to between 4 million and 5 million GPUs. That is the total volume of what the company will ship in all of this year.

Huang also added that the investment is “additive to everything that’s been announced and contracted.” That’s great news for Nvidia investors. The majority of the data center costs will be used for Nvidia chips and systems.

This deal alone could help Nvidia continue its astonishing rate of growth. Investors are recognizing that and adding Nvidia shares today.

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Howard Smith has positions in Nvidia and has the following options: short October 2025 $160 calls on Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.