The artificial intelligence ecosystem in the US is becoming increasingly interdependent as the sheer scale of the capital it requires is forcing the larger players into coalitions.

On Monday, Nvidia announced the biggest investment in its history, a $US100 billion ($151 billion) staged investment in OpenAI, which owns the popular ChatGPT chatbot. In return, OpenAI will over time buy $US100 billion worth of Nvidia’s world-leading chips.

So, Nvidia essentially gives OpenAI the funds with which to purchase Nvidia chips in a deal that brings OpenAI within the orbit of the world’s most valuable company. Nvidia shares rose almost 4 per cent on the announcement, taking its market capitalisation to a sliver under $US4.5 trillion.

The massive scale of capital required to develop AI is pushing industry giants like Nvidia into incestuous deals.Credit: Bloomberg

It’s not the only deal Nvidia has done that involves a certain level of circularity in its financing.

Last month, the company signed a $US1.5 billion deal with Lambda, a small AI cloud service provider, in which it leased back 18,000 GPU servers it had previously sold to Lambda. It also has equity in Lambda. The deal, as will occur with the new OpenAI relationship, gives Lambda the revenue to buy more Nvidia chips.

A week ago, Nvidia signed a $US6.3 billion deal to buy cloud capacity from a data centre........

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