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Nvidia to invest $1bn in artificial intelligence companies by 2024, as it emerges as a key backer of startups trying to tap into the AI revolution The tech giant’s chips are still work.
The semiconductor giant, which passed a $3tn market capitalization in June following strong demand for its high-performance graphics processing units (GPUs), has flowed more cash than ever some of its customers in the growing sector.
According to trade films and Dealroom research, Nvidia spent a total of $1bn around 50 start-up funds and several corporate deals in 2024, compared to 2023, which saw 39 start-up rounds and $872mn in spending.
Most of the transactions were “core AI” companies with high demands on computing resources, so in some cases with customers of its shifts.
Tech companies spent tens of billions of dollars on Nvidia chips last year since ChatGPT started two years ago it started an unprecedented investment. AI.
Nvidia’s progress in deals comes after it raised $9bn in funding for its GPUs as one of the world’s hottest products.
The company’s shares are up more than 170 percent in 2024, as it and other tech giants have helped boost the S&P 500 index. the best two years run this century.
Nvidia’s $1bn worth of investments in “unrelated entities” in the first nine months of last year includes its corporate and commercial investments. According to the company’s reports, the amount was 15 percent more than in 2023 and 10 times more than it invested 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 making their own chips. Such developments could make small AI companies a significant revenue generator for Nvidia in the future.
“Now Nvidia wants to be more competitive and it makes sense for them to have these new players,” said a fund manager who has a stake in many of the companies he has invested in.
By 2024, Nvidia has won more deals than Microsoft and Amazon, though Google still has the upper hand, according to Dealroom.
Such a strong partnership has raised concerns about Nvidia’s hold on the AI industry, which is currently facing intense antitrust scrutiny in the US, Europe and China.
Bill Kovacic, the former chairman of the US Federal Trade Commission, said competition watchdogs were “keen” to investigate “a prominent business making these large investments” to see if the purchase of the company’s shares was intended ” to achieve discretion”, although he said the investment in the customer base could prove beneficial.
Nvidia vehemently denies the idea that it is linking funding to any need to use its technology. The company said that “we are working to grow our environment, support great companies and improve our platform for everyone. We compete and win on value, without any investment or which ones we do.”
It also says: “Each company should be free to make an independent choice of technology that best suits its needs and strategies.”
The Silicon Valley group’s latest collaboration was a strategic investment in Elon Musk’s XAI, along with chipmaker AMD.
Some of 2024’s key investments include its participation in funding rounds for OpenAI, Cohere, Mistral and Perplexity, some of the leading AI model providers.
Nvidia also has a start-up incubator, Inception, which separately has helped the early development of thousands of new companies. The Inception program offers startups “preferred pricing” on hardware, as well as cloud loans from Nvidia partners.
There has been an increase in Nvidia’s acquisitions, including the acquisition of Run:ai, an Israeli AI task management platform. The deal was closed this week after being scrutinized by the EU’s antitrust regulator, which ultimately cleared the deal. The US Justice Department was also looking into the deal, according to Politico.
Nvidia also bought AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci. Overall it earned more in 2024 than 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, logistics, data storage and generation, etc. natural language processing and humanoid robots.
Its portfolio includes a number of startups whose valuations have risen into the billions of dollars. CoreWeave, a provider of AI cloud computing services and important customer of Nvidia chips, is preparing to float early this year at a price of about $35bn – up from about $7bn last year.
Nvidia invested $100mn in CoreWeave in early 2023, and participated in the company’s $1bn fundraising round in May.
Another group, Applied Digital, was facing a falling share price in 2024, with revenue losses and heavy debt obligations, before an investor group led by Nvidia provided $160mn in equity capital in September , which caused a 65% increase in its share price. .
“Nvidia is using their large market share and large cash flow to keep customers alive,” said Nate Koppikar, a short trader at Orso Partners. If Applied Digital had died, that (large volume) of sales would have died as well.”
