Nvidia (NASDAQ:NVDA) Places $1B Bet on AI Startups

Nvidia (NVDA) is betting big on AI startups, having invested $1 billion in such startups last year, according to an exclusive Financial Times report. The report cited corporate filings and Dealroom data, showing that the chip giant allocated these funds across 50 funding rounds and several corporate deals. This marked a notable increase from 2023, which saw $872 million spent on 39 startup rounds, according to Dealroom research.

Don't Miss Our New Year's Offers:

• Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
• Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

Why Is NVDA Investing in Startups?

The bulk of Nvidia’s investments focused on “core AI” companies requiring advanced computing infrastructure, often customers of its Graphics Processing Units (GPUs). This development comes as the semiconductor giant’s GPUs have become indispensable for AI computing, and the company boasts a cash pile of $9 billion.

As major tech players like Microsoft (MSFT) and Amazon (AMZN) develop custom chips to reduce their reliance on Nvidia, smaller AI startups are emerging as vital revenue sources. As a result, these AI startups could become an important source of revenue for NVDA in the future.

Notably, Nvidia struck more deals in 2024 than Microsoft and Amazon, though Google (GOOGL) remained a dominant investor in the sector.

NVDA Has Invested Strategically in AI Startups

Among its high-profile investments, Nvidia participated in funding rounds for leading AI firms such as OpenAI, Cohere, and Perplexity. It also made a strategic investment in Elon Musk’s xAI, alongside rival AMD (AMD). However, this aggressive dealmaking has drawn scrutiny amid growing antitrust investigations in the US, Europe, and China, raising questions about Nvidia’s influence in the rapidly evolving AI industry.

NVDA’s Bull Run Is Turning Board Members into Billionaires

Meanwhile, the chip giant’s market cap of more than $3 trillion has boosted the wealth of three of its longest-serving board members, turning them into billionaires. According to the Bloomberg’s Billionaires Index, Tench Coxe, who has been on the company’s board since its startup days, is worth $5.4 billion, with more than 32 million NVDA shares.

Other NVDA board members, including Mark Stevens, are now worth $9.3 billion, while Harvey Jones is now worth $1 billion and has sold more than $300 million worth of the company’s shares, according to data compiled by Bloomberg.

What Is the NVDA Price Target?

Analysts remain bullish about NVDA stock, with a Strong Buy consensus rating based on 37 Buys and three Holds. Over the past year, NVDA has skyrocketed by more than 100%, and the average NVDA price target of $177.08 implies an upside potential of 31.8% from current levels.

See more NVDA analyst ratings

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.