Nvidia has invested $1 billion in artificial intelligence companies by 2024, as it emerged as an important backer of startups trying to get into the AI revolution the tech giant's chips are powering.
The semiconductor giant, which surpassed the 3tn market cap in June after strong demand for its high-performance graphics processing units (GPUs), has pumped more money into its customers in the booming sector.
According to corporate filings and Dealroom research, Nvidia spent a total of 1 billion dollars in 50 start-up funding rounds and several business deals in 2024, compared to 2023, which saw 39 start-up rounds and 872mn of spending.
Many of the deals were with “core AI” companies that have computing infrastructure needs, and in some cases customers for their chips.
Tech companies have spent tens of billions of dollars on Nvidia's chips in the past year since the launch of ChatGPT two years ago and began an unprecedented investment. AI.
Nvidia's surge in deals comes after it amassed a $9 billion fund and its GPUs became one of the hottest things in the world.
Shares of the company rose more than 170 percent in 2024, as it and other tech giants helped power the S&P 500 index the longest running biennial of this century.
Nvidia's $1bn investment in “unrelated entities” in the first nine months of last year includes both its investment and corporate arms. According to the company's filing, that amount was 15 percent higher than in 2023 and more than 10 times the investment in 2022.
Some of Nvidia's biggest customers, such as Microsoft, Amazon and Google, are actively working to reduce their reliance on their GPUs by developing their own custom chips. Such developments could make small AI companies an even more important generator of Nvidia's revenues in the future.
“Right now Nvidia wants to have more competition and it makes sense for them to have these new players in the mix,” said a fund manager who has stakes in several companies he has invested in.
By 2024, Nvidia has made more deals than Microsoft and Amazon, although Google remains more active, according to Dealroom.
That further connection has raised concerns about Nvidia's hold on the AI industry, at a time when it faces heightened antitrust scrutiny in the US, Europe and China.
Bill Kovacic, the former chairman of the US Federal Trade Commission, said that competition observers are “interested” in investigating “the main business that makes these large investments” to see if the purchase of companies is aimed at “achieving exclusivity”, although he said that investment in the customer base can prove useful.
Nvidia strongly rejects the idea that it is tying funding to any requirement to use its technology. The company said that “we are working to grow our ecosystem, support large companies and improve our platform for everyone. We are competitive and successful, regardless of the investment we make.”
It added: “All companies should be free to make independent technology choices that suit their needs and plans.”
The Silicon Valley group's latest startup deal was a strategic investment in Elon Musk's XAI, alongside chipmaker AMD.
Other important investments for 2024 include participation in the funding rounds of OpenAI, Cohere, Mistral and Perplexity, some of the best AI modeling providers.
Nvidia also has a start-up incubator, Inception, which has previously helped the emergence of thousands of emerging companies. The Start Program offers starting “preferred pricing” on hardware, as well as cloud credits from Nvidia's partners.
There has been an uptick in Nvidia acquisitions, including the acquisition of Run:ai, an Israeli AI workload management platform. The deal was closed this week after a review by the EU's antitrust regulator, which ultimately cleared the transaction. The US Department of Justice was also looking into the deal, according to Politico.
Nvidia also bought AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci. Together it made more acquisitions in 2024 than in the previous four years combined, according to Dealroom.
The company invests widely, pouring millions of dollars into AI groups involved in medical technology, search engines, games, drones, chips, traffic management, objects, data storage and generation, natural language processing and humanoid robots.
Its portfolio includes a number of startups whose valuations have risen into the billions. CoreWeave, an AI cloud computing service provider and important customer of Nvidia chips, is set to float early this year at a price as high as $35bn – up from around $7bn last year.
Nvidia invested $ 100mn in CoreWeave at the beginning of 2023, and participated in an equity fundraising round by the company in May.
Another group, Applied Digital, was facing a falling share price in 2024, missing revenue and debt obligations, before a group of investors led by Nvidia provided 160mn of equity capital in September, resulting in a 65 percent increase in the share price. .
“Nvidia is using their large market cap and large cash flow to keep customers alive,” said Nate Koppikar, a short trader at Orso Partners. “If Applied Digital were to die, this (large volume) ad would die as well.”