Key Takeaways:
- “Nvidia’s chips primed the company to leverage the latest AI boom.”
- “But the GPU-maker is targeting other areas where AI could apply.”
- “Nvidia has invested in dozens of startups in 2023, including a company focused on pharmaceuticals.”
Nvidia, headquartered in California, has had a remarkable year, outperforming expectations and achieving a market capitalization exceeding $2 trillion by the conclusion of February.
Nvidia has emerged as one of the top three companies globally by market capitalization, trailing only Microsoft and Apple.
The surge in Nvidia’s value can be attributed to a straightforward dynamic: the burgeoning demand for artificial intelligence (AI) has spurred industries beyond the tech sector, such as healthcare and finance, to integrate AI technology into their operations. This integration relies heavily on graphics processing units (GPUs) to power AI systems, a market where Nvidia excels.
However, Nvidia’s strategy extends beyond chip manufacturing. The company is diversifying its investments to capitalize on the widespread adoption of AI across various sectors. Over the past year, Nvidia has significantly expanded its venture capital activities, funneling funds into numerous startups that leverage AI technology across diverse industries. According to data from Dealogic, Nvidia has invested in nearly three dozen startups, signaling its commitment to supporting AI-driven innovation beyond its core chip business.
The Wall Street Journal, in its initial report on Nvidia’s investment strategy, highlighted a significant uptick in the company’s venture capital activities. Compared to the previous year, Nvidia has increased its investment portfolio more than threefold in 2023, indicating a strategic shift towards fostering innovation and growth in emerging AI-driven markets.
The Nvidia ‘ecosystem’
Nvidia’s investment interests span a wide array of fields, ranging from software to pharmaceuticals and healthcare. In May, Moon Surgical secured $55.4 million in venture backing, with participation from Nventures, one of Nvidia’s investing arms, according to Cathay Health, a healthcare-focused investment firm also involved in the funding round. Additionally, Nvidia revealed in an SEC filing from February its stakes in small companies applying artificial intelligence, such as Recursion Pharmaceuticals, a drug discovery company, and Soundhound AI, which specializes in speech recognition technology.
Although spokespeople for Sofinnova Partners and Nventures did not respond to requests for comment, Nvidia’s investments seem to have yielded substantial returns. The company’s financial statements indicate that its investments were valued at approximately $1.55 billion as of January, a significant increase from $300 million the previous year. Notably, Nvidia’s stock has surged by 239% since January 2023.
However, the significance of these investments goes beyond financial gains. By supporting AI-focused ventures, Nvidia contributes to the growing demand for its chips, nurturing what the company describes as its “ecosystem.” While Nvidia declined to comment directly, it referred to a December blog post outlining its support for ventures harnessing Nvidia technologies. The company’s corporate investments arm prioritizes strategic collaborations to foster joint innovation, enhance the Nvidia platform, and expand the ecosystem.
Nvidia’s CEO, Jensen Huang, has underscored the growth potential of this ecosystem, highlighting the diverse range of industries and companies leveraging Nvidia’s platform. In an earnings call in February, Huang emphasized the company’s support for startups, large corporations, and various sectors such as healthcare, financial services, autonomous vehicles, and robotics, all of which contribute to Nvidia’s ecosystem.