Nvidia invested $1bn in AI deals in 2024

Nvidia has invested $1 billion in artificial intelligence companies by 2024, as it emerges as a key backer of start-ups trying to profit from the AI ​​revolution powering big tech groups’ chips.

The semiconductor giant, which crossed the $3tn market capitalization in June on the back of huge demand for its high-performance graphics processing units (GPUs), has pumped more into its own customers in the growing sector.

According to corporate filings and dealroom research, Nvidia 50 start-ups spent a total of $1 billion in funding rounds and several corporate deals in 2024, compared to 2023, with 39 start-up rounds and $872 million spent.

Most of the deals were with “core AI” companies that have high computing infrastructure needs, and therefore in some cases buyers of their own chips.

Tech companies have spent billions of dollars on Nvidia’s chips in the past year since ChatGPT’s debut two years ago. A.I.

Nvidia’s stock soared as it raised $9 billion in cash and its GPUs became one of the world’s most popular products.

Shares of the company rose more than 170 percent in 2024, as it and other tech giants helped bolster the S&P 500 index. This century is the best run in two years.

Nvidia’s $1 billion investment in “non-affiliates” in the first nine months of last year includes both its venture and corporate investment arms. That amount is up 15 percent from 2023 and more than 10 times what it invested in 2022, according to company filings.

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 developments could make small AI companies even more important generators 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 that has stakes in several companies it has invested in.

In 2024, Nvidia has more deals than Microsoft and Amazon, although Google is much more active, according to Dealroom.

Such extensive dealmaking has raised concerns about Nvidia’s grip on the AI ​​industry, at a time when it is facing heightened antitrust investigations in the US, Europe and China.

Bill Kovacic, a former chairman of the US Federal Trade Commission, said competition watchers were “enthusiastic” to investigate “a dominant enterprise with this large investor” to see if the company’s intention to buy a stake was to “gain exclusivity”, although he said the investment in the customer base could prove beneficial. .

Nvidia strongly rejects the idea that it ties funding to any need to use its technology. The company says it’s working to “grow our ecosystem, support great companies, and improve our platform for everyone. We compete and win based on merit, not the investment we make.”

It added: “Each company should be free to make independent technological choices that best suit their needs and strategies.”

The Silicon Valley group’s most recent start-up deal was a strategic investment in rival chipmaker AMD as well as Elon Musk’s xAI.

Other notable 2024 investments include its participation in funding rounds for OpenAI, Cohere, Mistral and Perplexity, some prominent AI model providers.

Nvidia also has a start-up incubator, Inception, which has separately helped the early evolution of thousands of new companies. The Inception program offers start-ups “preferred pricing” on hardware, as well as cloud credits from Nvidia’s partners.

There has been an uptick in Nvidia’s acquisitions, including the acquisition of Run:ai, an Israeli AI workload management platform. The deal closed this week after coming under scrutiny from the EU’s antitrust regulator, which ultimately cleared the transaction. According to Politico, the US Department of Justice was also looking into the deal.

Nvidia has bought AI software group Nebulon, OctoAI, Brave.Dev, Shoreline.io and Desi. Collectively it made more acquisitions in 2024 than in the previous four years, according to Dealroom.

The company is investing heavily, pouring millions of dollars into AI groups involved in medical technology, search engines, gaming, drones, chips, traffic management, logistics, data storage and generation, natural language processing and humanoid robots.

Its portfolio includes several start-ups whose valuations have soared into billions of dollars. CoreWeave, an AI cloud computing service provider and Notable buyers Nvidia Chips is preparing to float at a valuation of up to $35 billion earlier this year — up from about $7 billion a year ago.

Nvidia invested $100mn in CoreWeave by early 2023 and participated in a $1bn equity fund raising by the company in May.

Another group, Applied Digital, faced a share price decline in 2024, with revenue misses and substantial debt obligations, before a group of investors led by Nvidia provided $160 million in equity capital in September, prompting a 65 percent rise in its share price. .

“Nvidia is using its huge market cap and huge cash flow to keep buyers alive,” said Nat Koppikar, a short seller at Orso Partners. “If applied digital died, that is [a large volume] Sales that would have died with it.”