OpenAI says its new Jalapeño AI chip could significantly reduce the cost of running artificial intelligence by delivering substantially higher efficiency and faster inference, but Jim Cramer remains skeptical that the chip threatens Nvidia Corp’s (NASDAQ:NVDA) dominance.
OpenAI’s Jalapeño Chip Targets Lower AI Costs
On Tuesday, OpenAI said Jalapeño, its first custom inference chip developed with Broadcom Inc. (NASDAQ:AVGO), is designed to deliver both high throughput and low latency—two areas that are typical trade-offs.
The company plans to begin deploying Jalapeño within its infrastructure by the end of 2026, with production expected to ramp further in 2027.
OpenAI is already working on second- and third-generation versions, OpenAI hardware Vice President Richard Ho told reporters, according to The Verge.
However, OpenAI does not view Jalapeño as an outright Nvidia replacement. The company said it will continue deploying accelerators from Nvidia and other partners for training and inference.
OpenAI CEO Sam Altman took to X and said, "We made a chip and it is fast."
Jalapeño Beats Nvidia on AI Inference Benchmarks: OpenAI
OpenAI’s own benchmark results showed Jalapeño delivering 1.5x to 1.9x more AI work per watt and 1.7x to 3.6x lower end-to-end latency than comparison systems based on Nvidia’s GB200 and GB300 chips across GPT-OSS 120B, DeepSeek R1 and Kimi K2.5 1T.
The chip is designed specifically for inference, or the process of running trained AI models to generate responses and complete tasks.
OpenAI’s InferenceX benchmarks show Jalapeño outperforming Nvidia’s GB200 and GB300 across all three AI models, with higher performance per watt and significantly lower latency and token-to-token time.
| AI Model | NVIDIA Comparison | Peak Performance Per Watt | End-to-End Latency | Minimum TBT |
|---|---|---|---|---|
| GPT-OSS 120B | GB200 | 1.9x higher | 1.7x lower | 2.7x lower |
| DeepSeek R1 670B | GB300 | 1.7x higher | 3.6x lower | 4.1x lower |
| Kimi K2.5 1T | GB300 | 1.5x higher | 3.4x lower | 3.8x lower |
Nvidia did not immediately respond to Benzinga’s request for comment.
OpenAI’s Jalapeño Chip Could Lower AI Costs
In a conversation with Bloomberg TV, Ho said performance per watt could be 1.8x to 4x better than existing chips, potentially allowing the company to lower the cost of serving AI models as Jalapeño scales into production.
"Ultimately, when this rolls out into production, customer token prices should come down," Ho said.
Jim Cramer Dismisses Nvidia Challenger Claims
Cramer, however, isn’t convinced another custom AI chip will seriously challenge Nvidia.
"Every day I read about some chip that is superior to Nvidia. And every year I see no real competitors," Cramer said in a post on X.
Price Action: Nvidia shares closed at $213.05, up 2.19% on Tuesday. The stock rose another 0.31% to $213.70 in after-hours trading, according to Benzinga Pro.
According to Benzinga Edge Rankings, Nvidia ranks in the 99th percentile for growth and maintains positive price trend ratings across the short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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