NVDA Backs SB Energy for 4.25GW OpenAI Data Center

anywhere free on Schwab network.com. We're back on morning trade live. Let's focus on Nvidia. In a filing with the SEC, it disclosed a $21 billion stake in space and a $30 billion one in Intel. The stock closed Friday at the highest price since June the 2nd and about 5% below its all time high, reached on May the 15th. Here's the price action for the major players in the sector right now. We do have Nvidia outperforming across the Mac seven 7/10 of a percent higher at 226 bucks and change. We've got Broadcom up 6/10. Intel up 1.5% off the back of this disclosure now. And AMD is the laggard on the session. Down 6/10 of 1% today. In fact that does seem to be the little red spot amongst a sea of green here across the chip space for us this morning. That is the focus of the morning trade. Joining us now for a closer look is Molly Kaden. So Molly good morning to you. Nvidia and open AI now partnering with an energy company for an Ohio data center. That energy company being SP energy a subsidiary of Japan's SoftBank. I see shares in SoftBank rallying today. Just walk us through what we know here. It's quite an announcement Sam. And it comes on the heels of saying that the commitment had been scaled back. That is in fact not the case. Nvidia announcing that it secured the land, the power and the shell capacity through that partnership with SB energy that you just mentioned at this Ohio site to host Nvidia compute the customer, there is open AI. They signed a ten gigawatt data center deal. That project, expected to become one of the largest artificial artificial intelligence hubs to date. Now, because open AI lacks investment grade credit, Nvidia stepped in to back this deal. They're backstopping a portion of the value of the completed data center at the site, starting with the first phase of the project, which represents about five gigawatts of power. In return for its commitment, Nvidia will be the exclusive chip provider for the first half of the Ohio site and take that equity stake in SB energy. Nvidia also has the option to expand its commitment later on to the full campus. The equity state itself is a $1.5 billion equity investment in SB energy, which you already mentioned. Owned by SoftBank, counts open AI as an investor, but is also reportedly working on an IPO as soon as next month, with sources saying they aim to raise between 5 billion and $7 billion. Nvidia initially planned to guarantee all ten gigawatts to open a data center commitments up front that would have totaled about $250 billion. But Nvidia shares fell in late July after we reported that was reported. The discussions of that $250 billion guarantee. This data center campus will rely on the construction of a 9.2GW natural gas plant that will be owned by the US government and financed by Japan under a recent trade deal. Now it's very interesting here. Nvidia support is intended to make this project easier and less expensive to finance, by giving lenders some greater confidence that the data centers will retain their value. Even if open AI can no longer be the tenant here, and Nvidia's commitment is structured to require a series of mitigation steps before the chip maker would be obligated to make any payments. So, for example, if open AI had to step away from the project, SB energy would first try to lease the site to another customer for that same price. If SB energy wasn't able to find anybody suitable to take over, the firm would then try to sell the site and Nvidia would pay for any difference in value. Up to $105 billion. If the initial phase is already completed. But this is a pretty significant deal in that open AI is moving away from relying entirely on third party cloud providers like Microsoft, Amazon, Oracle and stepping up as a direct tenant here. So this is a pivot also with discussions of its own IPO down the pipe at some point. Very interesting timing, but it looks like Nvidia is stepping up to become the the landlord of the AI generation. Sam. Yeah. It's certainly strategically significant, as you point out, I think with the scale of the energy capacity as well. Yeah. And obviously without open AI being a publicly traded company, we are seeing shares in Nvidia and SoftBank being rewarded today. So I suppose investors like what they're hearing here. Really appreciate the details. Molly thanks so much for that. Let's trade it now with Charles Moon, stock strategist over at Prosper Trading Academy. Good morning Charles. Hope you had a nice weekend. How would you be looking at this one? For example purposes? Probably not the way a lot of people would think, and probably a lot of the retail and perhaps Wall Street's going to disagree, but I'm looking at the. 828, 227 half puts. I'd like to buy them at five and a quarter or lower, risking about 50%. I think that if it does start working lower initially, they'll find some support in the picture here at around this 220 ish price. But I think the breakdown will put us right into this. 215 sweet spot. I believe the gains could be a little over 100%. So we're risking 50% to make over 100% here. Now, the reason why is because it's it's struggle for one to actually continue to extend with a lot of positive news, you know, and more importantly, I have some real doubts that the AI story is going to keep going up while the turmoil in the Middle East is starting to also ramp up a bit. So, you know, this is more of a timing play. I assure you. I'm a very big Nvidia bull, but I think the better opportunity right now is more of a fade for the near term and try to capitalize on the downside. If it does work lower. Okay. That's Nvidia trading high today a 6/10 of a percent. You mentioned the developments in the Middle East. Charles. I'm wondering with all the news flow we're getting this morning as we kick off a fresh trading week here. How you're thinking about things given all the information we got last week. I mean, this week we do turn to big retail earnings. We've got a little bit of data trickling through as well. What are you watching. Yeah. I mean overall the general markets are are you know it's almost as if they're confused. And usually when they're confused it's either risk off or very short term trading. And that's what it seems like. There are segments of AI that are really strong today. The optics are doing well. The memory plays are doing well because the KOSPI has rallied. But you know, the overall aspect for me is, is the market seems to be looking for clarity. And every day they're looking for clarity. It just seems like the picture is getting more and more muddled. I think the the play to watch right now in the near term has nothing to do with AI. It has actually more to do with the Clarity Act. The crypto names are doing pretty well. I think circle has really good potential for a breakout. B, M and R is another one that has pretty good potential for breakout. Now you know the overall segments of AI with the AMD closing above the 50 SMA on Friday and struggling a bit today, there's certainly signs of life that are being shown in the AI play, which is always going to be a big driver for the markets. But, you know, with the S&P trading at these all time highs, with the Nasdaq approaching these levels again kind of stuck. You know the Nasdaq isn't pushing. You know that's the one to watch. Because if they start rolling they basically take everything down with them. And then we see this really good rotation usually into the financials and sometimes the industrials and maybe even some of the software as a service plays. But you know, it's it's a bit you know, it's a bit confusing. I can see how retail is is going to struggle here a bit. You know I would say continue to watch the memory plays. I think they'll be the standout. I think the optic plays in the near term could certainly be a recovery. And certainly I, I, I really do would rather have Nvidia go up. I just feel like this is the kind of range where a lot of retail traders and Wall Street have, have kind of taken profits or been very hesitant to jump in. So that's why I'm anticipating that it's more likely to go down than up, at least for the next week or so. All right. And as we've been saying as well, it feels like a little bit of a calm before the late August storm as well, with all the updates and event risk we've got next week. Charles, really appreciate