Nvidia invested $1bn in AI deals in 2024

Nvidia has invested $1 billion in artificial intelligence companies by 2024 as it emerged as a key backer of startups seeking to benefit from the artificial intelligence revolution powered by the big tech group’s chips.

The semiconductor giant, which surpassed $3 trillion in market capitalization in June on strong demand for its high-performance graphics processing units (GPUs), has pumped more money into some of its customers in the growing sector.

According to corporate filings and Dealroom research, Nvidia: In 2024, it spent a total of $1 billion across 50 startup funding rounds and a number of corporate deals, compared to 2023, which saw 39 startup rounds and $872 million spent.

The vast majority of deals were with “core AI” companies with high computing infrastructure requirements, and thus in some cases also proprietary chip buyers.

Tech companies have spent tens of billions of dollars on Nvidia’s chips over the past year since ChatGPT’s debut two years ago sparked an unprecedented surge in investment. AI:.

Nvidia’s surge in deals comes after it amassed $9 billion in cash as its GPUs became one of the world’s hottest products.

The company’s shares have soared more than 170 percent in 2024 as it and other tech giants helped power the S&P 500 index. the best two-year run of this century.

In the first nine months of last year, Nvidia’s $1 billion investment in “unaffiliated entities” includes both its venture and corporate investment sectors, according to company filings, up 15 percent from 2023 and more than 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 its GPUs by developing their own custom chips, a development that could make smaller AI companies more viable for Nvidia a more important revenue generator in the future.

“Nowadays Nvidia wants more competition, and it makes sense for them to have a mix of these new players,” said the fund manager, who has stakes in a number of companies in which he has invested.

In 2024, Nvidia closed more deals than Microsoft and Amazon, although Google remains 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 heightened antitrust scrutiny in the US, Europe and China.

Bill Kovacic, the former chairman of the US Federal Trade Commission, said competition watchdogs were “interested” in investigating “this heavily invested dominant enterprise” to determine whether buying the company’s shares was aimed at “achieving exclusivity”, although he said the investment would be based on the customer base. can be beneficial.

Nvidia vehemently rejects the idea that funding is tied to any requirement to use its technology. The company said it is “working to grow our ecosystem, support great companies, and improve our platform for everyone. We compete and win on merit, regardless of our own.” from the investments made”.

“Each company should be free to make independent technology choices that best suit their needs and strategies.”

The Silicon Valley group’s most recent startup deal was a strategic investment in Elon Musk’s xAI alongside rival chipmaker AMD.

Other notable 2024 investments included his participation in funding rounds for AI, Cohere, Mistral, and Perplexity, some of the most prominent providers of AI models.

Nvidia also has a startup incubator, Inception, which has individually helped thousands of startups grow early.The Inception program offers startups “preferred pricing” on hardware, as well as cloud loans from Nvidia partners.

There has been a spate of acquisitions by Nvidia, including the acquisition of Run:ai, an Israeli artificial intelligence platform, which closed this week after the EU antitrust regulator eventually cleared the deal as well was considering a deal, according to Politico.

Nvidia also bought AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci, making more purchases in 2024 than in the previous four years combined, according to Dealroom.

The company invests extensively, pouring millions of dollars into artificial intelligence groups involved in medical technology, search engines, gaming, drones, chips, traffic management, logistics, data storage and production, natural language processing and humanoid robots.

Its portfolio includes a number of start-ups with valuations reaching billions of dollars: CoreWeave, an AI cloud computing services provider, and significant buyer Nvidia’s chips are set to float early this year at a high valuation of $35 billion, 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 round in May.

Another group, Applied Digital, was facing a lower share price in 2024 with a revenue shortfall and significant debt obligations, before a group of investors led by Nvidia provided $160 million in equity capital, sending the share price up 65 percent.

“Nvidia is using its huge market cap and huge cash flow to keep buyers alive,” said short seller Nate Kopikar at Orso Partners. “If Applied Digital were dead, that is [a large volume] sales that will die with it.”