Nvidia, Deutsche Telekom Forge Sovereign AI Cloud

Nvidia NVDA is partnering with Deutsche Telekom (DTEGY) to build Europe's first sovereign industrial AI cloud, aiming to speed up AI-driven manufacturing across Germany by 2026.

The deal, unveiled Friday alongside German Chancellor Friedrich Merz, tasks Deutsche Telekom with operating an AI factory that will host Nvidia's AI infrastructure for design, engineering, simulation, digital twins and robotics.

Nvidia shares ticked up 1.5% premarket on the news before paring gains as investors weighed execution risks.

Under the agreement, European manufacturers can tap into a localized AI platformreducing data-sovereignty concernswhile leveraging Nvidia's GPUs and software stack.

Jensen Huang, Nvidia's CEO, said every plant needs two factories: one for making things, and one for creating the intelligence that powers them, underscoring the push toward simulation-first workflows.

Deutsche Telekom CEO Timotheus Hottges added that Europe must sprint, not stroll to secure a competitive technology position. The partners did not disclose upfront costs or anchor customers but said pilot deployments will begin next year, ahead of full rollout in 2026.

Why It Matters: Establishing a sovereign AI cloud could help European manufacturers accelerate product development, keep sensitive data domestic and reduce reliance on U.S. or Asian hyper-scale providers.

Closing: Investors will watch for early pilot results and commercial partnershipslikely announced at Nvidia's GTC conference in March 2026to gauge how quickly the AI factory can drive recurring revenue.