Nvidia Backs OpenAI's Record-Breaking Data Center Deal with Up to $105 Billion Guarantee
Nvidia has signed a record-breaking deal to back OpenAI's massive data center project in Ohio, guaranteeing up to $105 billion. The 'LPS' (land, power, and shell) deal gives OpenAI around 8 gigawatts of IT capacity, with Nvidia becoming the exclusive chip supplier for the first half of the site.
Nvidia CEO Jensen Huang calls 'LPS' the next strategic resource, saying it's replaced chips and networking gear as the bottleneck in AI buildout. The arrangement works by Nvidia backing the residual value of finished data centers, rather than guaranteeing rent payments. If OpenAI walks away, SB Energy has to find a replacement tenant and then try to sell the facilities, with Nvidia covering the difference in value.
The deal is part of a larger trend of AI labs growing faster than their balance sheets can support long-term infrastructure contracts. The Wall Street Journal reports that nine tech companies hold around $3 trillion in mostly AI-related obligations that don't appear on their balance sheets. Leases only get recorded once payments begin, and purchase commitments only when goods are delivered.