Nvidia has invested $1 billion in artificial intelligence companies in 2024, as it emerged as a key backer of startups trying to profit from the artificial intelligence revolution powered by the big tech group’s chips.
The semiconductor giant, which surpassed a market capitalization of $3 trillion in June on strong demand for its high-performance graphics processing units (GPUs), has pumped ever-increasing amounts into some of its customers in the growing sector.
According to corporate documents and Dealroom research, Nvidia 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 spent $872 million.
The vast majority of deals were with “core AI” companies with high computing infrastructure requirements, and in some cases also with customers of their own chips.
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 wave of investment in AI.
Nvidia’s surge in business comes after it raised $9 billion in wartime cash and its GPUs have become one of the most popular commodities in the world.
The company’s shares are up more than 170 percent in 2024, as it and other tech giants helped boost the S&P 500 to the best two-year period in this century.
Nvidia’s $1 billion investment in “unaffiliated entities” in the first nine months of last year includes both its venture and corporate investment arms. According to the companies, that amount was 15 percent higher than in 2023 and more than 10 times higher than what was invested in 2022.
Some of Nvidia’s biggest customers, such as Microsoft, Amazon and Google, are actively working to reduce their dependence on its GPUs by developing their own custom chips. Such developments could make smaller AI companies a more important revenue generator for Nvidia in the future.
“Right now Nvidia wants more competition and it makes sense to have these new players in the mix,” said the fund manager with stakes in a number of companies he has invested in.
In 2024, Nvidia has done more deals than Microsoft and Amazon, although Google remains far more active, according to Dealroom.
Such prolific dealmaking has raised concerns about Nvidia’s influence on the artificial intelligence industry, at a time when it faces increased antitrust scrutiny in the US, Europe and China.
Bill Kovacic, a former chairman of the US Federal Trade Commission, said competition watchdogs were “keen” to investigate a “dominant company making heavy investments” to see if the purchase of a stake in the company was aimed at “achieving exclusivity”, although he said that investing in a customer base could prove beneficial.
Nvidia strongly rejects the idea of tying funding to any requirement to use its technology. The company said it is “working to grow our ecosystem, support large companies and improve our platform for everyone. We compete and win on merit, regardless of any investment.”
It added: “Each company should have the freedom to make independent technology decisions that best suit their needs and strategies.”
The Silicon Valley group’s most recent start-up deal was a strategic investment in Elon Musk’s xAI, along with rival chip maker AMD.
Other notable investments in 2024 included participation in funding rounds for OpenAI, Cohere, Mistral and Perplexity, some of the most prominent AI model providers.
Nvidia also has a start-up incubator, Inception, which has separately helped the early evolution of thousands of startups. The Inception program offers beginners “preferred pricing” on hardware, as well as cloud credits from Nvidia partners.
There has been an increase in Nvidia’s acquisitions, including the takeover of Run:ai, an Israeli AI platform for workload management. The deal closed this week after coming under scrutiny from the EU’s antitrust regulator, which eventually cleared the transaction. The US Department of Justice was also looking at the deal, according to Politico.
Nvidia also acquired AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci. Combined, it made more acquisitions in 2024 than in the previous four years combined, 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.
His portfolio includes numerous start-ups whose values have risen to billions of dollars. CoreWeave, a provider of cloud computing services AI and significant customer Nvidia’s chips, is set to go public early this year at a valuation of as much as $35 billion — up from about $7 billion a year ago.
Nvidia invested $100 million in CoreWeave in early 2023, and participated in a $1 billion fundraising round in May.
Another group, Applied Digital, was facing a share price decline in 2024, with a lack of revenue and significant debt obligations, before a group of investors led by Nvidia provided $160 million in equity capital in September, sending the share price up from 65 percent.
“Nvidia is using its huge market cap and huge cash flow to keep customers alive,” said Nate Koppikar, a short seller at Orso Partners. “If Applied Digital died, that is [a large volume] sales that would die with it.”
