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On Thu, 2 Jan, 8:00 AM UTC
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Nvidia's $1B AI Investment Overshadowed by Potential $1B Fine in China
Nvidia's investments threaten to be overshadowed by a probe from China's antitrust watchdog, which could result in a fine of up to $1 billion. Throughout 2024, Nvidia invested $1 billion in tens of AI companies as it solidified itself as a key backer of new start-ups looking to capitalize on the AI boom. The world's second-most valuable company, whose semiconductors power most of the AI industry, saw its market cap exceed $3 trillion in June. However, a potential $1 billion fine from a Beijing antitrust probe risks casting gloom over Nvidia's 2024 investments - and highlights the close eye global regulators are keeping on the semiconductor giant. Nvidia Invested $1 Billion Into Start-Ups Over the past twelve months, Nvidia has spent approximately $1 billion across 50 start-up funding rounds and several corporate deals, the Financial Times reported . The investments mark an increase from 2023 when the company spent $872 million across just 39 start-up funding rounds. Nvidia's increased spending is a direct response to the explosive demand for AI technologies and its growing implementation across industries. By investing heavily in AI start-ups and corporate partnerships, Nvidia is not only strengthening its ecosystem but also ensuring its products remain at the forefront of technological capabilities. Although tech companies have been spending billions on Nvidia's cutting-edge chips throughout 2024, some are beginning to look to reduce their reliance on them. Big Tech companies such as Microsoft, Amazon, Meta, and Tesla are all looking to develop their own custom chips to become more independent in the AI space. If this trend continues, Nvidia's decision to invest in smaller AI companies will become even more crucial to maintaining its revenue. Potential $1 Billion Antitrust Fine In December, reports claimed that a Chinese antitrust watchdog probe could result in a fine of up to $1 billion for Nvidia. According to China's State Administration for Market Regulation, the antitrust probe applies the country's antimonopoly law to Nvidia's 2019 acquisition of Israeli-based solutions provider Mellanox Technologies. Despite granting "conditional" approval for the deal in April 2020, China has reopened a probe after Nvidia restricted exports of its semiconductors to the country to comply with U.S. regulations. The probe marks the first time China has reopened scrutiny on a closed deal. Nvidia's Scrutinized by Watchdogs As Nvidia continues to soar in success and wealth, so does government scrutiny worldwide. The company's massive investments across the industry, which totaled significantly more than Microsoft and Amazon in 2024, have put it in the firing line of global regulators. Many regulators, including those in the U.S., China, and Europe, have raised concerns over Nvidia's grasp of the AI industry. Former chair of the U.S. Federal Trade Commission Bill Kovacic, as reported by the Financial Times, said antitrust watchdogs wanted to investigate a "dominant enterprise making these big investments" to see if buying company stakes was aimed at "achieving exclusivity." Nvidia denied any claims that its investments were tied to exclusive hardware usage, stating it was "working to grow our ecosystem, support great companies, and enhance our platform for everyone." It added, " We compete and win on merit, independent of any investments we make. "Every company should be free to make independent technological choices that best suit their needs and strategies."
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Nvidia invested $1bn in artificial intelligence deals in 2024
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."
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Nvidia's Investments In Elon Musk's xAI, Perplexity, OpenAI, And Other Startups Crossed $1 Billion Mark In 2024 - Advanced Micro Devices (NASDAQ:AMD), Amazon.com (NASDAQ:AMZN)
NVIDIA Corp. NVDA invested $1 billion across 50 startup funding rounds. The Jensen Huang-led company also acquired a number of AI players, consolidating its position in the segment. What Happened: The semiconductor giant's investment surge represents a 15% increase from its $872 million spending in 2023, according to corporate filings and Dealroom research. The investments primarily targeted companies developing core AI technologies that often require substantial computing infrastructure, reported the Financial Times on Wednesday. The investment spree follows Nvidia's accumulation of a $9 billion cash reserve, driven by unprecedented demand for its graphics processing units since ChatGPT's debut two years ago. The company's market capitalization surpassed $3 trillion in June, while its shares climbed more than 170% in 2024. Notable investments included stakes in Elon Musk's xAI, alongside rival Advanced Micro Devices Inc. AMD, and participation in funding rounds for prominent AI model providers OpenAI, Cohere, Mistral, and Perplexity. The company also acquired several AI software firms, including Run:ai, Nebulon, and OctoAI. See Also: 'Roaring Kitty' Keith Gill Sparks Speculation With Rick James-Themed Post On X: GameStop, Chewy Shares In Focus -- Unity Software Pops 12% Why It Matters: This aggressive investment strategy comes as major customers like Microsoft Corp. MSFT, Amazon.com Inc. AMZN, and Alphabet Inc. GOOGL GOOG work to develop their own custom chips, potentially making smaller AI companies more crucial for Nvidia's future revenue. The expansion has attracted attention from antitrust regulators. Bill Kovacic, former Federal Trade Commission chair, noted that competition watchdogs are particularly interested in examining whether such investments aim to achieve market exclusivity. Nvidia rejected suggestions that its investments are tied to technology requirements, according to the report, stating it "competes and wins on merit, independent of any investments." The company emphasized that its portfolio companies maintain freedom in their technological choices. Read Next: Cathie Wood's Ark Invest Predicts Explosive Growth In New Year: Crypto, Robotics, AI And Other Predictions For 2025 Image Via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$120.39-1.67%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewAMZNAmazon.com Inc$219.68-0.73%GOOGAlphabet Inc$190.45-1.16%GOOGLAlphabet Inc$189.31-1.01%MSFTMicrosoft Corp$421.60-0.76%NVDANVIDIA Corp$134.29-2.33%Market News and Data brought to you by Benzinga APIs
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Nvidia invested $1 billion in AI companies in 2024, solidifying its position in the AI industry. However, the company faces potential antitrust scrutiny and a $1 billion fine in China.
In a bold move to solidify its position in the artificial intelligence (AI) sector, Nvidia invested $1 billion across 50 startup funding rounds and several corporate deals in 2024 [1][2]. This significant increase from $872 million spent in 2023 underscores the company's commitment to fostering innovation and maintaining its dominance in the AI chip market [2].
Nvidia's investment portfolio in 2024 included stakes in prominent AI companies:
The company also made several strategic acquisitions, including:
These investments span various AI applications, including medical technology, search engines, gaming, drones, and natural language processing [2].
Nvidia's aggressive investment strategy comes on the heels of unprecedented demand for its graphics processing units (GPUs). The company's market capitalization surpassed $3 trillion in June 2024, with its shares rising more than 170% throughout the year [2][3]. This success has allowed Nvidia to amass a $9 billion war chest, fueling its investment spree [2].
Despite its financial success, Nvidia faces several challenges:
Antitrust Concerns: The company's extensive investments have raised eyebrows among global regulators, including those in the U.S., China, and Europe [1][2].
Potential Fine in China: A Chinese antitrust watchdog probe could result in a fine of up to $1 billion for Nvidia, related to its 2019 acquisition of Mellanox Technologies [1].
Competition from Tech Giants: Major customers like Microsoft, Amazon, and Google are developing their own custom chips, potentially reducing their reliance on Nvidia's GPUs [2].
Nvidia's investments are reshaping the AI landscape:
Ecosystem Growth: By supporting startups and enhancing its platform, Nvidia aims to grow its ecosystem and maintain its competitive edge [1][2].
Startup Incubation: Through its Inception program, Nvidia has helped thousands of fledgling companies with preferred pricing on hardware and cloud credits [2].
Portfolio Success: Some of Nvidia's investments have seen significant growth, such as CoreWeave, which is preparing for an IPO at a potential valuation of $35 billion [2].
As the AI industry continues to evolve, Nvidia's strategy of heavy investment in startups could prove crucial in maintaining its revenue streams, especially if larger tech companies reduce their dependence on Nvidia's chips [2][3].
Nvidia has strongly rejected claims that its investments are tied to exclusive hardware usage. The company stated, "We compete and win on merit, independent of any investments we make," emphasizing that companies should be free to make independent technological choices [1][2].
As Nvidia navigates the complex landscape of AI development and regulatory scrutiny, its billion-dollar investment strategy in 2024 marks a significant chapter in the company's efforts to shape the future of artificial intelligence.
Reference
[2]
Nvidia's aggressive investments in AI startups and its dominant position in the AI chip market have led to unprecedented stock growth and volatility. The company's future hinges on the continued expansion of AI technologies.
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