> If you have extra cash and cannot spend it on your own business, you can just pay dividends to the shareholders.

That is an option. It is usually not the best option.

Dividends are taxed. You are forcing shareholders to pay a good chunk of money in taxes.

Suppose Nvidia decides not to hedge the risk that competing products eat into their margins. Some years they get lucky and are flush with revenue. Other years they have much lower revenue.

Even in bad years, they want to keep paying to make future products. Cutting employee pay or mass firings would break their engineering org. To avoid that, they would need enough cash on hand to survive several bad years. Now they can't pay dividends because they need this extra buffer of cash! Hedging is a better deal for everyone.

> The shareholders are free to invest in competing businesses.

OpenAI is not (yet) public. Most Nvidia shareholders can't choose to hedge risk by buying shares in OpenAI, or any similar company (they are all private or a small part of a bigger public business).