Nvidia has emerged as a key backer of startups looking to profit from the AI revolution driven by the Big Tech group’s chips, investing $1 billion in artificial intelligence companies in 2024.
Driven by huge demand for high-performance graphics processing units (GPUs), the semiconductor giant, whose market capitalization exceeded $3 trillion in June, is now targeting some of its own customers in the fast-growing field. They are pouring in an unprecedented amount of money.
NVIDIA spent a total of $1 billion in 50 startup funding rounds and several corporate deals in 2024, according to company filings and Dealroom research. In comparison, there were 39 startup funding rounds and $872 million in disbursements in 2023.
The bulk of the deals were with “core AI” companies with high demand for computing infrastructure, and in some cases included buyers of their own chips.
Tech companies have spent tens of billions of dollars on Nvidia chips over the past year since the introduction of ChatGPT two years ago began an unprecedented surge in investment in AI.
Nvidia’s increase in deals comes after the company’s GPUs became one of the world’s most popular products and amassed a $9 billion war chest.
The company’s stock price rose more than 170% in 2024 as the company and other tech giants pushed the S&P 500 index to its highest two-year high this century.
NVIDIA’s $1 billion worth of investments in “unaffiliated entities” in the first nine months of last year included both its venture and corporate investment arms. The amount was 15% higher than in 2023 and more than 10 times the amount invested in 2022, according to the company’s filing.
Some of Nvidia’s biggest customers, including Microsoft, Amazon, and Google, are actively working to reduce their dependence on GPUs by developing their own custom chips. Such developments could make smaller AI companies a more important source of revenue for Nvidia in the future.
“Now Nvidia wants more competition and it makes sense to bring these new players on board,” said a fund manager with stakes in several companies in which Nvidia has invested.
According to Dealroom, Nvidia closed more deals than Microsoft and Amazon in 2024, but Google remains far more active.
These prolific deals have raised concerns about NVIDIA’s dominance of the AI industry as antitrust scrutiny increases in the U.S., Europe and China.
Bill Kovačić, former chairman of the US Federal Trade Commission, said competition watchdogs should use “such large scale It said it was “keen” to investigate “the dominant companies in which it has invested”. Your customer base could prove beneficial.
Nvidia strongly rejects the idea of tying funding to requirements for using its technology. The company said it is “committed to growing our ecosystem, supporting great companies, and strengthening our platform for everyone.” We compete and win on merit, independent of investment. ”
It added: “Every company should be free to make its own technology choices that best suit its needs and strategy.”
The Silicon Valley group’s latest startup deal was a strategic investment in Elon Musk’s xAI alongside rival chipmaker AMD.
Other significant investments in 2024 include participating in funding rounds with OpenAI, Cohere, Mistral, and Perplexity, some of the most well-known AI model providers.
Nvidia also has a startup incubator, Inception, which has separately supported the early evolution of thousands of startups. The Inception program offers startups “preferred pricing” on hardware and cloud credits from Nvidia partners.
Nvidia’s acquisitions are on the rise, including the acquisition of Run:ai, an Israeli AI workload management platform. The deal was completed this week following scrutiny from EU antitrust regulators, who ultimately cleared it. According to Politico, the U.S. Department of Justice was also reviewing the deal.
Nvidia also acquired AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io, and Deci. According to Deal Room, the company made more acquisitions in 2024 than in the previous four years combined.
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The company has invested extensively, with millions of dollars in its AI group involved in medical technology, search engines, gaming, drones, chips, traffic management, logistics, data storage and generation, natural language processing, and humanoid robots. I’m here.
Its portfolio includes startups whose valuations have soared to billions of dollars. CoreWeave, an AI cloud computing service provider and significant purchaser of Nvidia chips, is preparing to go public at a valuation of as much as $35 billion earlier this year. That’s up from about $7 billion a year ago.
Nvidia invested $100 million in CoreWeave in early 2023 and participated in the company’s $1 billion equity funding round in May.
Another group, Applied Digital, faced a sharp decline in its stock price in 2024 due to lost revenue and a high debt burden, until a group of investors led by NVIDIA raised $160 million in equity capital in September. The stock price rose 65%. .
“NVIDIA is using its huge market cap and massive cash flow to keep buyers alive,” said Nate Koppiker, a short seller at Ortho Partners. “If Applied Digital had disappeared, that[massive amount of]sales would have disappeared with it.”
