Nvidia invested $1bn in artificial intelligence companies in 2024, as it emerged as a crucial backer of start-ups trying to gain from the AI revolution the big tech group’s chips are powering.
The semiconductor giant, which surpassed a $3tn market capitalisation in June on the back of huge demand for its high-performing graphics processing units (GPUs), has pumped ever greater sums into some of its own customers in the burgeoning sector.
According to corporate filings and Dealroom research, Nvidia spent a total of $1bn across 50 start-up funding rounds and several corporate deals in 2024, compared with 2023, which saw 39 start-up rounds and $872mn in spending.
The vast majority of deals were with “core AI” companies with high computing infrastructure demands, and so in some cases also buyers of its own chips.
Tech companies have spent tens of billions of dollars on Nvidia’s chips over the past year since the debut of ChatGPT two years ago kick-started an unprecedented surge of investment in AI.
Nvidia’s uptick in deals comes after it amassed a $9bn war chest of cash with its GPUs becoming one of the world’s hottest commodities.
The company’s shares rose more than 170 per cent in 2024, as it and other tech giants helped power the S&P 500 index to its best two-year run this century.
Nvidia’s $1bn worth of investments in “non-affiliated entities” in the first nine months last year includes both its venture and corporate investment arms. According to company filings, that sum was 15 per cent more than in 2023 and more than 10 times as much as it 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 smaller AI companies a more important generator of revenues 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 had invested in.
In 2024, Nvidia struck more deals than Microsoft and Amazon, although Google remains far more active, according to Dealroom.
Such prolific dealmaking has raised concerns about Nvidia’s grip over the AI industry, at a time when it is facing heightened antitrust scrutiny in the US, Europe and China.
Bill Kovacic, former chair of the US Federal Trade Commission, said competition watchdogs were “keen” to investigate a “dominant enterprise making these big investments” to see if buying company stakes was aimed at “achieving exclusivity”, although he said investments in a customer base could prove beneficial.
Nvidia strongly rejects the idea that it connects funding with any requirement to use its technology. The company said it was “working to grow our ecosystem, support great companies and enhance our platform for everyone. We compete and win on merit, independent of any investments we make.”
It added: “Every 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 Elon Musk’s xAI, alongside rival chipmaker AMD.
Other significant 2024 investments included its 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 separately has helped the early evolution of thousands of fledgling companies. The Inception programme 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 a takeover 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. The US Department of Justice was also looking at the deal, according to Politico.
Nvidia also bought AI software groups Nebulon, OctoAI, Brev.dev, Shoreline.io and Deci. Collectively it has made more acquisitions in 2024 than the previous four years combined, according to Dealroom.
The company is investing widely, 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 a number of start-ups whose valuations have soared to billions of dollars. CoreWeave, an AI cloud computing service provider and significant purchaser of Nvidia chips, is preparing to float early this year at a valuation as high as $35bn — increasing from about $7bn a year ago.
Nvidia invested $100mn in CoreWeave in early 2023, and participated in a $1bn equity fundraising round by the company in May.
Another group, Applied Digital, was facing a plunging share price in 2024, with revenue misses and considerable debt obligations, before a group of investors led by Nvidia provided $160mn of equity capital in September, prompting a 65 per cent surge in its share price.
“Nvidia is using their massive market cap and huge cash flow to keep purchasers alive,” said Nate Koppikar, a short seller at Orso Partners. “If Applied Digital had died, that’s [a large volume] of sales that would have died with it.”
