OpenAI Just Ordered Chips for 18 Hoover Dams’ Worth of AI

OpenAI isn’t slowing down. The company just announced a massive chip deal with Broadcom that makes their recent spending spree look even more aggressive.

The scale here is staggering. In just three weeks, OpenAI committed to enough data center capacity to power over 31 million homes for an entire year. That’s roughly 18 times the Hoover Dam’s output.

This isn’t about future demand. According to OpenAI’s president, they’re already drowning in users.

Broadcom’s Custom Chips Change the Game

Monday’s announcement sent Broadcom shares up nearly 11%. The two companies have been working together for 18 months on custom-designed chips optimized specifically for inference work.

Inference means running AI models day-to-day. Think every time someone uses ChatGPT or generates a video with Sora. That’s inference at work.

The deployment starts late next year. Broadcom will roll out 10 gigawatts of computing power using these co-designed chips networked through their Ethernet stack.

Why does custom silicon matter? OpenAI can bake everything they learned from building cutting-edge models directly into the hardware. That unlocks better performance and lowers costs for running AI models.

Plus, OpenAI president Greg Brockman told CNBC the custom approach will significantly reduce operating expenses. Given how expensive these models are to run, that’s huge.

The Spending Spree Keeps Growing

Let’s add up OpenAI’s recent deals. On September 22, they announced 10GW of Nvidia-based data centers. Two weeks later came a 6GW deal with AMD. Both followed the massive $500 billion Stargate Project with Softbank and Oracle.

Total capacity announced since January? Roughly 36 gigawatts. And 26GW of that came in the past three weeks alone.

For context, the Hoover Dam generates about 2GW of power. That’s enough electricity for nearly 1.8 million homes yearly. So OpenAI just committed to infrastructure equivalent to 18 Hoover Dams.

Building all this takes years. But OpenAI isn’t speculating about future need. They’re desperately trying to catch up with current demand.

Demand Is Already Exploding

Greg Brockman didn’t mince words when talking with Jim Cramer. He said OpenAI is “currently being swept along by the avalanche” of demand.

ChatGPT was already the fastest-growing consumer app in history. Now their new video app Sora is growing even faster.

That’s not a projection. It’s happening right now. The infrastructure OpenAI is building isn’t about capturing theoretical future users. It’s about serving people already hammering their systems.

Microsoft backed OpenAI launched ChatGPT in late 2022. The chatbot went viral immediately and brought generative AI to regular people. That kicked off the current AI boom across the tech industry.

Now demand is accelerating beyond what anyone predicted. Hence the unprecedented infrastructure buildout.

There’s Another Mystery Buyer

Here’s where it gets interesting. During Broadcom’s earnings call last month, they mentioned a fourth major custom chip partner they didn’t name.

CNBC’s David Faber asked Broadcom’s semiconductor president Charlie Kawwas if OpenAI was that mystery customer. Kawwas said he’d “love to take a $10 billion purchase order” from OpenAI but hasn’t received one yet.

So who’s the fourth customer? Analyst Ben Reitzes from Melius Research speculates it might be Amazon-backed Anthropic. That’s another major AI company building competing models.

If true, that means even more massive data center buildouts are coming. The spending isn’t slowing down. It’s accelerating across multiple players.

The AI Trade Is Still Early

Some parts of the market show bubble-like froth. But companies like Broadcom and Nvidia still trade at reasonable levels given their growth outlook.

Consider this. Nvidia CEO Jensen Huang said the OpenAI deal alone equals Nvidia’s entire 2025 revenue. Then he clarified that partnership is “incremental to all the work” with Microsoft Azure, Oracle Cloud, and CoreWeave.

In other words, that massive OpenAI deal is additional revenue on top of everything else. The numbers keep getting bigger.

Broadcom stock has gained roughly 54% year-to-date. Nvidia continues climbing. Yet both still look reasonable given the demand picture emerging.

We’re watching the largest industrial undertaking in human history unfold in real-time. And it’s just getting started.

Power Companies Win Big

All this computing power needs electricity. Massive amounts of it.

Jensen Huang told Jim Cramer last week that without meeting America’s increasing energy demand, there’s no industrial growth. Without industrial growth, there’s no stock price growth, no economic growth, no national security.

That’s driving huge gains for power-related stocks. GE Vernova jumped more than 7% Monday. Eaton rose roughly 2.5%.

GE Vernova makes natural gas turbines that connect directly to data centers when the grid gets overtaxed. They also build small modular nuclear reactors, though meaningful nuclear capacity is still years away.

Eaton makes power management systems and components that keep data centers running efficiently. Their cooling and airflow management solutions maintain the environmental conditions these facilities need.

So the AI infrastructure boom isn’t just about chips and servers. It’s reshaping entire industries from semiconductors to power generation to cooling systems.

The scale of capital deployment happening right now is unlike anything we’ve seen. And according to the companies actually building this infrastructure, they’re already behind demand.

That should tell you everything about where this market is heading.