NVIDIA is Placing Itself As a Leading AI Investor

In a strategic move to solidify its dominance in AI processors, NVIDIA, the world’s leading chipmaker, has emerged as a standout investor in artificial intelligence startups. The company’s proactive investment approach has positioned it as a key player in the rapidly evolving landscape of AI technologies.

Over the past year, NVIDIA has invested in “more than two dozen” companies, ranging from major AI platforms valued in the billions to nimble startups applying AI in diverse sectors like healthcare and energy. According to Dealroom, which monitors venture capital investments, NVIDIA’s involvement in 35 deals in 2023 marks a significant leap, nearly six times more than the previous year. This robust investment strategy has propelled the chipmaker to the forefront of AI investment, surpassing renowned venture firms like Andreessen Horowitz and Sequoia.

NVIDIA’s venture arm, NVentures, and its corporate development team have played pivotal roles in expanding the company’s portfolio. Noteworthy investments include Inflection AI and Cohere, positioned as formidable competitors to OpenAI, the creator of ChatGPT. Hugging Face, valued at $4.5 billion, and CoreWeave, a cloud infrastructure company focused on high-performance computing, further underscore NVIDIA’s commitment to diverse AI applications.

The recent addition to NVIDIA’s investment portfolio is Mistral, a Paris-based AI startup valued at €2 billion. What ties these companies together is their reliance on NVIDIA products, be it GPU chips or software. The synergy between NVIDIA and its portfolio companies creates a mutually beneficial relationship, reinforcing NVIDIA’s status as a strategic partner for startups.

Mohamed Siddeek, head of NVentures, emphasized the importance of relevancy in their investment criteria. He stated, “Companies that use our technology, who depend on our technology, who build their businesses on our technology… I can’t think of a situation where we’ve invested in a company that did not use Nvidia products.”

NVIDIA’s H100 GPU has become a sought-after product in Silicon Valley, particularly for creators of large language models, powering generative AI services like ChatGPT. The efficiency of the H100 GPU in training systems has contributed to its popularity in the AI community.

In the nine months ending in October, NVIDIA’s investments in “non-affiliates” reached $872 million, a significant increase compared to the same period the previous year. The company’s investment strategy involves writing substantial checks, running into tens of millions of dollars, from its own balance sheet.

Contrary to speculation, NVIDIA denies seeking special terms with startups to ensure the use of its chips. Siddeek clarified, “We try to be as investee-friendly as possible. We don’t have any conditions per se.” The goal is to foster a closer relationship with portfolio companies, with startups hoping to become a priority for NVIDIA as new chips are rolled out.

The burgeoning success of NVIDIA’s H100 GPU is indicative of its strategic positioning in the AI industry. Demand for AI chips has propelled NVIDIA’s revenue to $13.5 billion in Q2, doubling from the previous year. The company’s investments in generative AI companies have not only increased in number but also in size, with substantial contributions to major funding rounds.

In summary, NVIDIA’s proactive investment strategy, grounded in relevancy and strategic partnerships, has propelled it to the forefront of AI investment. The company’s diversified portfolio, encompassing a spectrum of AI applications, positions it as a leader in shaping the future of artificial intelligence. As the demand for specialized processors continues to rise, NVIDIA’s deepening involvement in the generative AI ecosystem reinforces its pivotal role in driving innovation in the AI landscape.