At Morgan Stanley’s Technology, Media and Telecom Conference in downtown San Francisco on Wednesday, NVIDIA CEO Jensen Huang said the company’s recent investments in OpenAI and Anthropic are likely its final investments in both companies, and the investment window will close once the companies go public, as expected later this year.
It could be something as simple as that. At a time when companies are rushing to make more profits, sometimes close to the eve of going public, Nvidia is minting money by selling the chips that power both companies. There’s no need to pour more money into one or the other and aim for profits.
Nvidia doesn’t provide much detail. Reached for comment today following Huang’s remarks, a spokesperson pointed TechCrunch to a recording of the company’s fourth-quarter earnings call, in which Huang said that all of NVIDIA’s investments are “very squarely and strategically focused on expanding and deepening the reach of our ecosystem,” a goal it likely achieved with previous investments in both companies.
Still, several other dynamics could also explain the setback, including the cyclical nature of these arrangements themselves, which raises questions about the possibility of a bubble. When Nvidia first announced last September that it would invest up to $100 billion in OpenAI, MIT Professor Michael Cusumano blandly described it as “a wash” to the Financial Times, saying, “Nvidia is investing $100 billion in OpenAI stock, and OpenAI is investing 1,000 Nvidia chips. He said he would buy more than 100 million dollars.
That may explain why commitment has shrunk. The $30 billion investment NVIDIA completed last week as part of OpenAI’s $110 billion round fell far short of its initial promise. If there was more to the story than that, Mr. Huang, who dismissed suggestions of a rift between the two companies as “nonsense,” said nothing.
Meanwhile, the relationship between Nvidia and Anthropic appeared to be fraught with its own challenges. Just two months after Nvidia announced a $10 billion investment in November, Anthropic CEO Dario Amodei took to the stage at Davos and, without naming Nvidia directly, likened the sale of high-performance AI processors by U.S. semiconductor companies to authorized Chinese customers to “selling nuclear weapons to North Korea.” (ah.)
In retrospect, the nuclear weapons comparison was trivial. Days before Mr. Hwang appeared at the banking conference, the Trump administration blacklisted Anthropic and barred federal agencies and military contractors from using its technology because it would not allow its models to be used for autonomous weapons or domestic mass surveillance.
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Within hours of this announcement, OpenAI signed its own contract with the Department of Defense. Anthropic called this “deceptive,” and the public seemed to think the same way. Within 24 hours, Claude overtook ChatGPT to the top of Apple’s US App Store. (At the end of January, Anthropic was outside the top 100, according to Sensor Tower data.)
Nvidia owns stakes in two companies that are currently going in very different directions, potentially dragging customers and partners with them.
I’m not sure Huang expected this to happen, given Nvidia’s string of partnerships. But the reason he said Wednesday he is likely to hold back on future investments (because the IPO window closes the door to this type of deal) is that it’s hard to understand how late-stage private investment actually works. What is more likely is that this is a departure from a highly complex situation, and very rapidly.
