OpenAI signs record Ohio data center lease with Nvidia backing up to $105 billion

OpenAI has signed a lease for the largest data center project announced to date, with Nvidia guaranteeing up to $105 billion. Nvidia CEO Jensen Huang is calling "LPS" the next strategic resource, while the Wall Street Journal reports that $3 trillion in AI commitments like these don't show up on any balance sheet.

OpenAI has signed a 20-year lease with SoftBank subsidiary SB Energy for the "PORTS-Pike" campus in Ohio. The deal gives OpenAI around 8 gigawatts of IT capacity, while the WSJ puts the project's gross total at 10 gigawatts once cooling and infrastructure are factored in. The site sits partly on a former US Department of Energy uranium enrichment facility and draws power from a 9.2-gigawatt gas plant that the US government owns and Japan is financing as part of a trade agreement.

Huang announced the deal with a new acronym. "LPS" stands for land, power, and shell, meaning the site, the electricity supply, and the building itself. According to Huang, these basics have replaced chips and networking gear as the real bottleneck in the AI buildout. AI labs like OpenAI are growing faster than their balance sheets can support long-term infrastructure contracts, so Nvidia is stepping in with its financial muscle.

The WSJ describes how the arrangement works: Nvidia isn't guaranteeing OpenAI's rent payments. Instead, it's backing the residual value of the finished data centers in the first construction phase, which covers 4.25 gigawatts of IT capacity. If OpenAI walks away, SB Energy first has to find a replacement tenant, then try to sell the facilities. Only then does Nvidia cover the difference in value, capped at $105 billion. In return, Nvidia becomes the exclusive chip supplier for the first half of the site and is investing $1.5 billion in SB Energy.

Huang expects around 1.5 million GPUs per system generation, or $150 to $200 billion in revenue. Across all sites, he puts OpenAI's commitments through 2030 at roughly 12 gigawatts of Nvidia compute. If Nvidia exercises its option on the remaining 3.75 gigawatts in Ohio, the package grows to about 16 gigawatts worth roughly $600 billion. OpenAI says it only pays for finished capacity. The first 800 megawatts are slated to come online in 2028.

Three trillion dollars stay off the books

A Wall Street Journal analysis shows how large these commitments have become across the industry. Nine tech companies, including Alphabet, Meta, Microsoft, and Nvidia, hold around $3 trillion in mostly AI-related obligations that don't appear on their balance sheets. Leases only get recorded once payments begin, and purchase commitments only when goods are delivered. Leases that haven't started yet add up to $1.2 trillion, four times as much as a year earlier. At Alphabet, purchase commitments jumped from $332 billion to $811 billion within three months.

The contracts are nearly impossible to cancel, and both Alphabet and Amazon recently reported negative free cash flow. Morgan Stanley analysts warn that investors can barely gauge these companies' actual debt levels anymore.

The WSJ had already reported that Nvidia originally wanted to backstop the entire project with around $250 billion, but scaled back the guarantee after a 5 percent stock drop and pressure from investors. The final $105 billion cap comes in below the $120 billion figure that circulated most recently, and it only covers the asset value rather than the full lease.

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