Such is the pace of the Nvidia (NASDAQ:NVDA) news flow, its landmark deal with Intel is already being overshadowed by another headline-grabbing development.
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On Monday, Nvidia said it plans to invest up to $100 billion in OpenAI, aimed at accelerating the rollout of data centers and power capacity. The agreement includes a letter of intent for Nvidia to participate in at least 10 GW of systems, beginning in the second half of 2026 with Vera Rubin.
Over time, BofA’s Vivek Arya, an analyst ranked in the top 3% of Street stock experts, thinks this could generate an estimated $300–$500 billion in revenue, implying a 3x–5x ROI. But probably even more significantly, OpenAI and Nvidia have agreed to work together with Nvidia serving as a preferred partner for compute and networking. While the deal doesn’t specify share, Arya thinks it increases competitive risks for other vendors such as Broadcom and AMD.
However, Arya does think the deal raises some questions around how this will be perceived from a customer-financing standpoint. The optics of such a large investment in a customer could remain a concern until Nvidia clarifies the accounting treatment. The analyst assumes that Nvidia will account for it as it has with other large equity stakes, like CoreWeave, while continuing to treat OpenAI as a normal commercial customer. Although the potential cumulative revenue of $300 billion–$500 billion looks sizable, it’s worth remembering that Nvidia could generate roughly three times that amount between 2026 and 2030. In that context, OpenAI would represent a share of sales similar to the chip giant’s largest customers today, which make up about 15%–25% of total revenue. “In other words,” the 5-star analyst goes on to add, “OpenAI could be one of a concentrated set of large cloud customers that NVDA is selling to, and not necessarily an outlier.”
That said, Arya thinks that ultimately this is a “strategic deployment” of free cash flow. With FCF margins around 40%–50% on $200 billion in revenue, Nvidia is set to generate hundreds of billions of dollars over the next few years. Unlike in the past, deploying that capital into other public assets has become less attractive given “lack of strategic fit and the burdensome regulatory process.” That leaves two main paths: return cash to shareholders or reinvest in the broader ecosystem to expand the addressable market, accelerate product timelines, and even capture geopolitical advantages, as seen with the recent Intel investment.
Bottom line, Arya maintained a Buy rating on NVDA shares, backed by a $235 price objective. There’s potential upside of 28% from current levels. (To watch Arya’s track record, click here)
There’s widespread agreement on the Street with the BofA stance; based on a mix of 37 Buys, 2 Holds and 1 Sell, the stock claims a Strong Buy consensus rating. The average target stands at $211.97, a figure that factors in a one-year gain of 15.5%. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.