The OpenAI deal went from $100B to $30B and Nvidia called it "never a commitment."
u/corenellius ·
Reddit — r/ValueInvesting
· February 26, 2026 at 00:23
· ⬆ 26 pts
· 💬 11 comments
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Summary
The post analyzes recent developments at Nvidia, focusing on a significant reduction in a potential deal with OpenAI (from a rumored $100B to a reported $30B) and its implications for capital allocation.
The author's thesis is that Nvidia's massive free cash flow generation, combined with more disciplined capital allocation than previously signaled, represents a bullish signal that isn't fully captured by standard financial screens. The author also flags an upcoming accounting change that could be misinterpreted by the market.
Quality assessment: This is well-researched commentary, not deep-dive DD. The author connects specific data points (deal size, FCF, margins, accounting changes) to a broader investment thesis, demonstrating a sophisticated understanding of financial analysis and corporate governance.
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The $100B OpenAI announcement in September 2025 was never in Nvidia's financials as a commitment. Huang walked it back in February. The FT reported a $30B deal is being negotiated. Tonight Jensen said "we believe we are close" to finalizing it. A 70% reduction in headline number with almost no coverage of what actually changed.
From a value perspective this matters because undisclosed capital allocation intentions at that scale are exactly the kind of thing that doesn't show up in a screen. You can model FCF all day but if management is signaling $100B out the door and then quietly walking it back, that's a governance flag worth understanding.
Speaking of capital allocation: FCF was $96.6B for the full year. They returned $41.1B to shareholders and still have $58.5B remaining on the buyback authorization. The cash generation is genuinely unusual at this scale.
One accounting change to flag before the May print: starting Q1 FY27 Nvidia is moving stock-based compensation back into non-GAAP figures. That adds roughly $1.9B to reported opex. EPS comparisons will look optically worse next quarter. Not a business change, just a methodology shift, but worth knowing so the headline doesn't read as deterioration when it isn't.
Gross margins at 75.2% this quarter, up from 73.6% last quarter. The Blackwell margin compression thesis has been wrong for six straight quarters.