Jensen Huang feels valid. In the space of a few weeks, Nvidia’s CEO has committed billions in deals and investments – with potentially more around the corner.
The spending spree shows how far Nvidia is expanding beyond chips and raises a bigger question: How much of the AI ecosystem does it want to own?
Nvidia reports this in its profit figures report Wednesday that it has committed $18 billion in equity investments for the remainder of the fiscal year, with a focus on AI modelers, infrastructure financiers and other private companies.
At the end of July, it owned $47.9 billion in private companies – more than double the $22.3 billion it owned at the end of the last fiscal year
Many of these deals are not outright acquisitions. Luke Lango, chief technology analyst at InvestorPlace, said licensing technology, hiring talent and taking minority stakes can help avoid some of the regulatory scrutiny and integration issues that can come with an acquisition.
Nvidia is spreading its bets
Nvidia’s expansion comes as some of its biggest customers are moving into its turf. While Amazon, Google and Microsoft build their own chips, Nvidia is making further inroads into the infrastructure, software and models that surround them.
In August, Nvidia announced it had invested $1.5 billion in SB Energy and taken a stake in Cloverleaf Infrastructure – two companies helping to solve the data center land and energy crisis.
On the financing front, it partnered with Wall Street firms to raise more than $500 billion in external funding for AI infrastructure.
It has also signed a multi-billion dollar deal with coding startup Poolside and is reportedly eyeing investments or deals with the Start AI search Bewilderment and Korean inference boot chip Uprisings.
Nvidia announced Wednesday that it has made a cash payment of $2.94 billion in connection with the Nvidia deal AI hardware startup Groqannounced in December.
Aggressive dealmaking comes with risks – and fuels a well-known criticism of circular finance.
“Nvidia is now a supplier, financier and shareholder of many of the same companies that buy its chips,” Lango said, “so a slowdown would hit both its own revenues and its equity holdings at once.”
On Wednesday’s earnings call, Nvidia’s chief financial officer said Colette Kress said that while some say the company is doing circular financing, “we see it differently.”
“We believe that these investments, as measured by the strength of their demand, the business they create for us, the ecosystem they build on the Nvidia platform and the equity returns on our invested capital, will be excellent, and that our risk is limited,” Kress said on the call.
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