Nvidia invested $1 billion in artificial intelligence corporations in 2024, becoming a key backer of startups seeking to capitalize on the AI ​​revolution that powers the tech giant's chips.
The semiconductor giant, which reached a market cap of over $3 trillion in June on the back of big demand for its powerful graphics processing units (GPUs), has been pumping ever-larger sums into a few of its own customers within the emerging sector.
According to company filings and dealroom research, Nvidia spent a complete of $1 billion in 2024 across 50 startup funding rounds and multiple corporate deals, in comparison with 2023, when there have been 39 startup rounds and $872 million in spending .
The overwhelming majority of deals were with “core AI” corporations with high computing infrastructure requirements and, in some cases, buyers of their very own chips.
Tech corporations have spent tens of billions of dollars on Nvidia chips over the past yr since ChatGPT's debut two years ago sparked an unprecedented surge in investment in AI.
The surge in deals at Nvidia comes after the corporate amassed a $9 billion war chest and its GPUs have change into one among the world's most sought-after commodities.
The company's shares rose greater than 170 percent in 2024 because it and other tech giants helped propel the S&P 500 index to its best two-year run this century.
Nvidia's $1 billion in investments in “unaffiliated corporations” in the primary nine months of last yr includes each its enterprise and company investment arms. According to the corporate, this amount was 15 percent higher than in 2023 and greater than ten times the investment in 2022.
Some of Nvidia's largest customers, equivalent to Microsoft, Amazon and Google, are actively working to cut back their dependence on Nvidia's GPUs by developing their very own custom chips. Such a development could make smaller AI corporations a more vital revenue generator for Nvidia in the longer term.
“Right now Nvidia desires to have more competition and it is sensible for them to herald these latest players,” said a fund manager who has stakes in a variety of corporations during which the corporate had invested.
According to Dealroom, Nvidia closed more deals than Microsoft and Amazon in 2024, although Google stays way more lively.
Such prolific deals have raised concerns about Nvidia's control over the AI ​​industry at a time when the corporate is facing heightened antitrust scrutiny within the United States, Europe and China.
Bill Kovacic, former chairman of the U.S. Federal Trade Commission, said competition regulators were “interested” in investigating a “dominant company that makes these large investments” to seek out out whether the acquisition of company shares was geared toward ” to attain exclusivity”. Customer base could prove useful.
Nvidia strongly rejects the concept of ​​linking funding to a commitment to make use of its technology. The company said it’s working to “grow our ecosystem, support great corporations, and improve our platform for everybody. “We compete and win on our performance, whatever the investments we make.”
It continues: “Every company must have the liberty to make independent technological decisions that best suit their needs and methods.”
The Silicon Valley company's most up-to-date start-up deal was a strategic investment in Elon Musk's xAI alongside rival chipmaker AMD.
Other significant investments in 2024 included participation in funding rounds for OpenAI, Cohere, Mistral and Perplexity, a number of the best-known AI model providers.
Nvidia also has a startup incubator, Inception, which has supported the early development of 1000’s of young corporations. The Inception program offers startups “preferential pricing” on hardware in addition to cloud credits from Nvidia’s partners.
There has been an uptick in Nvidia's acquisitions, including its acquisition of Run:ai, an Israeli AI workload management platform. The deal was accomplished this week after being reviewed by the EU antitrust regulator, which ultimately approved the transaction. According to Politico, the US Department of Justice was also reviewing the deal.
Nvidia also bought the AI ​​software corporations Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci. According to Dealroom, the corporate made more acquisitions overall in 2024 than within the previous 4 years combined.
The company is investing heavily, investing hundreds of thousands of dollars in AI groups operating in medical technology, serps, gaming, drones, chips, traffic management, logistics, data storage and generation, natural language processing and humanoid robots.
Its portfolio includes a variety of startups whose valuations have risen to billions of dollars. CoreWeave, an AI cloud computing service provider and major buyer of Nvidia chips, is preparing to go public early this yr at a valuation of as much as $35 billion – up from about $7 billion -dollars a yr ago.
Nvidia invested $100 million in CoreWeave in early 2023 and took part in the corporate's $1 billion capital raising round in May.
Another group, Applied Digital, faced a declining share price, revenue shortfalls and significant debt obligations in 2024 before an investor group led by Nvidia committed $160 million in equity in September, causing its share price to rise 65 percent.
“Nvidia is using its massive market cap and money flow to maintain buyers alive,” said Nate Koppikar, short seller at Orso Partners. “If Applied Digital had died, (a big portion of) the sales would have died with it.”
