“They’re Financing” a Rival: Jim Cramer Challenges Nvidia’s $30 Billion OpenAI Investment

Cramer questions whether NVDA's $30 billion OpenAI investment built a strategic partner or funded "Jalapeno," a direct Nvidia competitor.

Unlike Nvidia's other deals, the OpenAI investment carries no equity protections, with no preferred shares, warrants, or backstop guarantees, per Faber.

NVDA has beaten earnings five straight times yet fallen in five of the last six post-earnings sessions, with shares at $213.

Ahead of NVIDIA 's ( NASDAQ:NVDA ) second-quarter earnings report scheduled for Wednesday, August 26 at 4:20 PM ET , Jim Cramer used a CNBC Squawk on the Street segment with David Faber to question the roughly $30 billion Nvidia has invested in OpenAI, and whether that capital is buying loyalty or financing a rival.

Cramer was direct. "If Jensen Huang can explain what his master plan is with all these investments, then maybe we can decide exactly whether it's an ecosystem he's creating or just a liability he's creating. When you give $30 billion to OpenAI, what does OpenAI do? They create Jalapeño as a competitor to Jensen and Nvidia."

He returned to the point moments later: "If you give $30 billion to someone, doesn't that usually say, you know what, you're our partner, you're our pal? But instead, what they got was a competitor. So they're financing Jalapeno."

Why Nvidia's OpenAI Deal Looks Different From Its Other AI Bets

Faber added the more revealing structural detail. " They don't have an ownership stake in OpenAI, as opposed to what Nvidia has done with so many others where they're the backstop, they're the residual guarantee, they have preferred, they have warrants, they have common stock, they have backstop. There are multiple different forms of support they're providing to the ecosystem." In other words, the OpenAI check went out without the layered equity and guarantee protections Nvidia has typically attached elsewhere.

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As of the last reported quarter, Nvidia's multi-year cloud service commitments stood at $30.0 billion and total supply-related commitments reached $119.0 billion. CFO Colette Kress described the strategy on the last call as "strategic investments, both upstream supply chain and downstream go-to-market ecosystem" that are "critical to the market's development and our long-term position."