Will Nvidia Run Out of Money?

The math doesn’t add up. Nvidia Corp. (NASDAQ: NVDA | NVDA Price Prediction) will put $100 billion into OpenAI and $7 billion into Intel. OpenAI may need more money later to buy more Nvidia chips and further build out data centers. Nvidia has become the banker to the world of artificial intelligence (AI). However, it had $84 billion in cash and securities on its balance sheet at the end of the last quarter. Granted, its cash flow from operations was $26 billion. However, that sum may need to grow faster to keep up with the money it is investing.

Nvidia’s ability to raise money is extensive. It has not talked about the chances that it will do that in the future.

Other investors are also pouring money into the sector, which should help AI industry leaders to buy Nvidia chips. Private equity has started to dump money into data centers. Microsoft, Meta, and Amazon have said that, altogether, they will put over $150 billion into data center buildouts this year. Those investments will grow as they put more data centers online. Nvidia sales will benefit from these buildouts. In a way, it could be said that data center chip sales will be so huge that Microsoft and its competitors are funding the Nvidia cash machine.

Nvidia’s investment in OpenAI also will fund a huge growth in data centers, each of which needs billions of dollars of its chips. Nvidia is getting part of its money back through these purchases.

Nvidia is largely counting on the AI boom to continue at a rapid pace, and its stock price reflects that expectation. It is the only company with a market cap of over $4 trillion. Its stock is up 1,367% in the past five years.

The megatech world has several companies with more cash in the bank than Nvidia has. It goes with the territory when these companies throw off so much cash every quarter. Apple, for example, has $130 billion in cash and securities.

Finally, the AI server farm industry will need much more money in the coming years. A Bain analysis shows that the entire industry will need income of $2 trillion to support server farm activity in the next five years. The overall revenue of the industry will be $800 billion short of that. “By 2030, AI companies will need $2 trillion in combined annual revenue to fund the computing power needed to meet projected demand, Bain said in its annual Global Technology Report,” according to a Bloomberg summary of the analysis.

What Bain is saying is that the sector will be underfunded. Nvidia and other investors are going to have to come up with more cash.

Nvidia Price Prediction and Forecast 2025-2030