Nvidia will invest $1 billion in AI companies in 2024, emerging as a critical backer of startups trying to capitalize on the AI revolution powered by the big tech group's chips.
The semiconductor giant, whose market value surpassed $3 trillion in June on the back of massive demand for high-performance graphics processing units (GPUs), has pumped bigger sums than ever before for some of its customers in the booming sector.
According to company filings and Dealroom research, Nvidia It spent a total of $1 billion across 50 startup funding rounds and several corporate deals in 2024, compared to 2023, which saw 39 startup rounds and $872 million in spending.
The vast majority of deals were with “core AI” companies that had high requirements for computing infrastructure, and thus in some cases also buyers of its own chips.
Technology companies have spent tens of billions of dollars on Nvidia chips over the past year since ChatGPT debuted two years ago, leading to an unprecedented surge in investment in… Amnesty International.
Nvidia's surge in deals comes after it raised $9 billion in cash as its graphics processing units became one of the world's hottest commodities.
The company's shares rose more than 170 percent in 2024, as it and other tech giants helped push the S&P 500 to record highs. The best two years of this century.
Nvidia's $1 billion investments in “unaffiliated entities” in the first nine months of last year include both its venture and corporate investment arms. According to company filings, this amount was 15 percent more than in 2023 and more than 10 times what you invested in 2022.
Some of Nvidia's largest customers, such as Microsoft, Amazon, and Google, are actively working to reduce their reliance on its GPUs by developing their own custom chips. Such a development could make small AI companies a more important source of revenue for Nvidia in the future.
“Right now, Nvidia wants there to be more competition, and it makes sense for them to have these new players in the mix,” said a fund manager with a stake in a number of companies it has invested in.
In 2024, Nvidia closed more deals than Microsoft and Amazon, although Google is still much more active, according to Dealroom.
Such prolific deals have raised concerns about Nvidia's grip on the AI industry, at a time when it faces increasing antitrust scrutiny in the United States, Europe and China.
Bill Kovacic, former head of the US Federal Trade Commission, said competition watchdogs were “eager” to investigate “a dominant company making these large investments” to see whether the purchase of company stakes was aimed at “achieving exclusivity”, although he said the investments In a company a customer base can be beneficial.
Nvidia strongly rejects the idea of tying funding to any requirements for using its technology. The company said it is “working to grow our ecosystem, support major companies, and enhance our platform for everyone. We compete and win on merit, regardless of any investments we make.”
“Each company should have the freedom to make independent technology choices that best fit its needs and strategies,” she added.
The Silicon Valley group's most recent startup deal was a strategic investment in Elon Musk's xAI startup, alongside rival chipmaker AMD.
Other significant investments for 2024 included its participation in funding rounds for OpenAI, Cohere, Mistral, and Perplexity, leading AI model providers.
Nvidia also has a startup incubator, Inception, which has separately helped with the early development of thousands of startups. The Inception program offers startups “preferred pricing” on hardware, as well as cloud credits from Nvidia partners.
There has been an uptick in acquisitions by Nvidia, including the acquisition of Run:ai, an Israeli platform for managing AI workloads. The deal closed this week after coming under scrutiny by the European Union's antitrust watchdog, which eventually cleared the deal. The US Department of Justice is also looking into the deal, according to Politico.
Nvidia also bought AI software suites Nebulon, OctoAI, Brev.dev, Shoreline.io, and Deci. Collectively, they made more acquisitions in 2024 than in the previous four years combined, according to Dealroom.
The company is investing extensively, pumping millions of dollars into AI groups working in medical technology, search engines, gaming, drones, chips, traffic management, logistics, data storage and generation, natural language processing, and humanoid robotics.
Its portfolio includes a number of startup companies whose value has grown to billions of dollars. CoreWeave, an AI and cloud computing services provider Big buyer NVIDIA's subsidiary, Nvidia, is preparing to go public early this year at a valuation of up to $35 billion — up from about $7 billion last year.
Nvidia invested $100 million in CoreWeave in early 2023, and participated in a $1 billion fundraising round by the company in May.
Another group, Applied Digital, was facing a share price decline in 2024, with lost revenue and significant debt obligations, before a group of investors led by Nvidia provided $160 million in equity capital in September, resulting in a 65% increase in equity capital. cent in the price of its shares. .
“Nvidia is using its massive market capitalization and massive cash flows to keep buyers alive,” said Nate Kopekar, a short seller at Orso Partners. “If Applied Digital died, that (high volume) of sales would have died with it.”
