Nvidia emerging as major stakeholder in AI firms

Nvidia CEO Jensen Huang. Image Courtesy: Wikipedia

Nvidia, the world's most valuable chipmaker, has strengthened its position as a major investor in artificial intelligence startups in the current year.

According to a Financial Times report, the company has struck 35 deals in 2023, a substantial increase from the previous year, establishing itself as one of the most active investors in the AI sector, based on estimates by Dealroom.

Nvidia's investments in 2023 cover a broad spectrum, ranging from significant AI platforms with billion-dollar valuations to smaller startups concentrating on applying AI in areas such as healthcare and energy. The company's investment strategy is centred on supporting businesses that leverage its technology and products.

To facilitate this, Nvidia has created a dedicated venture capital arm named NVentures.

Mohamed Siddeek, the Head of NVentures, expressed strong confidence in the firm's recent investments in a conversation with FT. Alongside its corporate development team, NVentures has curated a portfolio that includes prominent AI entities like as Inflection AI and Cohere, which are said to be two of the biggest competitors to OpenAI.

The report indicates that Nvidia's investment portfolio extends to Hugging Face, a provider of data and tools for AI developers, and CoreWeave, a cloud infrastructure company specialising in high-performance computing applications reliant on Nvidia's graphics processing units (GPUs).

Nvidia recently made a significant investment in Mistral, a Paris-based AI startup valued at 2 billion euros (approximately $2.2 billion).

All companies in Nvidia's portfolio are reported to be customers of the chipmaker, using either its GPU or software.

In particular demand this year in Silicon Valley is Nvidia's H100 GPU, a potent processor facilitating more efficient training of "large language models" in the generative AI field.

Nvidia adopts an investment approach involving substantial financial commitments, often in the tens of millions of dollars, directly from its balance sheet, FT said.

Nvidia has emerged as the primary supplier of computer chips for AI processes, resulting in a diminished funding landscape for its potential competitors. It's stratospheric rise reflects in the firm reaching a market valuation of $1.12 trillion in December, doubling from two years ago.