Nvidia (NASDAQ:NVDA), a leading player in the AI sector, has experienced a significant surge in demand for its GPUs, propelling its stock price by over 450% since early 2023. This growth spurt has also seen Nvidia ramping up its investments in AI startups, with the company making more than half of its startup investments since 2005 in the past two years alone. Notably, the value of these investments soared to over $1.5 billion at the beginning of 2024, a substantial increase from $300 million the previous year.
In comparison, previous reports highlighted Nvidia’s steady but less aggressive investment strategy in AI-related startups. Earlier, Nvidia’s growth in AI was primarily driven by its technological advancements in GPU manufacturing. However, recent developments indicate a strategic shift towards significant financial backing of AI startups, underscoring the company’s commitment to leading the AI revolution. This shift aligns with Nvidia’s broader strategy to expand its influence and capabilities in the AI domain.
Substantial Financial Backing
The company’s investments have been notable, participating in over ten $100 million-plus funding rounds for AI startups in 2024 alone, and supporting more than 50 startups since 2023. Nvidia’s venture capital division, NVentures, has also been active, making 26 investments over 2023 and 2024. Despite a recent setback where Nvidia received a subpoena from the U.S. Department of Justice as part of an antitrust investigation, leading to a nearly 10% drop in its stock price, the company continues to invest robustly in AI startups.
The antitrust probe into Nvidia has raised concerns about potential monopolistic practices. Historically, Nvidia has faced regulatory scrutiny, but the current probe appears to be more comprehensive, reflecting the increased attention on AI and tech giants’ market practices. Nvidia’s quick response to the antitrust investigation by continuing its strategic investments underscores its resilience and determination to maintain its stronghold in the AI sector.
Continued AI Startup Investments
Nvidia recently announced its participation in a $100 million funding round for Tokyo-based Sakana AI, a company focused on developing AI models trained on small datasets. The company’s founder and CEO, Jensen Huang, emphasized the significance of these investments, stating,
“We invest in these companies because they’re incredible at what they do. These are some of the best minds in the world.”
This investment is part of a broader trend where Nvidia continues to support innovative AI startups across various domains, from humanoid robots to autonomous vehicles.
From backing Perplexity AI and Hugging Face to supporting Adept AI and Databricks, Nvidia’s investment strategy showcases a diverse portfolio. The chipmaker’s approach aims to leverage its technological strengths to foster advancements in AI. These investments not only enhance Nvidia’s market position but also contribute to the broader AI ecosystem’s growth and innovation.
Nvidia’s robust investment in AI startups highlights its strategic focus on dominating the AI landscape. Despite facing regulatory challenges, the company’s commitment to investing in pioneering AI technologies remains unwavering. By supporting a wide range of AI initiatives, Nvidia aims to harness the collective potential of these startups to drive future innovations. This strategy not only strengthens Nvidia’s market position but also accelerates the overall development of AI technologies, benefiting the industry as a whole.
