① NVIDIA has captured market attention by making substantial investments in upstream and downstream companies amid the AI boom, building a complete ecosystem from chips to AI models; ② This year, NVIDIA's equity investments have exceeded $400 billion, covering both publicly traded and private companies, including investments in data center operator IREN and specialty glass manufacturer Corning.
Cailian Press reported on May 9 (edited by Niu Zhanlin) that in recent years,$Artificial intelligence (AI) (IP000032.IP)$the industry has witnessed an unprecedented wave of enthusiasm, and in this transformative phase, $NVIDIA (NVDA.US)$ NVIDIA is not only a technological engine but also a significant player in the capital markets. Through substantial investments in upstream and downstream enterprises, NVIDIA is building a complete ecosystem ranging from chips to AI models, which has also drawn market attention to its investment model.
Data shows that NVIDIA's equity investments this year have exceeded $40 billion, covering both public and private companies. This week, the company reached investment agreements with data center operator $IREN Ltd (IREN.US)$ IREN Ltd $Corning (GLW.US)$and specialty glass manufacturer Corning, committing to invest $2.1 billion and $3.2 billion respectively. Following the announcement, the stock prices of IREN and Corning surged.
Industry insiders pointed out that this investment model not only helps NVIDIA secure downstream customers but also ensures, to a certain extent, a stable supply for the company’s hardware needs.
NVIDIA is the biggest beneficiary of the AI boom, providing GPUs essential for training large models and running large-scale AI workloads. The global rush for GPUs has driven the company’s stock price up more than 11-fold in four years, giving it a current market value of approximately $5.2 trillion and making it one of the most valuable companies globally. To ensure stable hardware demand and production capacity, NVIDIA is expanding across the entire AI supply chain, forming comprehensive investments from chips, photonics technology, cloud services, to AI model companies.
Some analysts believe that the company’s layout, similar to Google’s and$Amazon (AMZN.US)$Microsoft’s, may carry the risk of 'using its own funds to stimulate its core business,' which is seen as circular investment.
Matthew Bryson, an analyst at Wedbush Securities, noted that NVIDIA’s investments and expansions 'fully align with the theme of circular investment,' but these investments highlight NVIDIA’s strategic foresight and could form a 'competitive moat,' provided the company executes smoothly.
Jordan Klein, an analyst at Mizuho, stated that investments in component manufacturers are 'very smart for the company and an effective use of cash' because they accelerate key technological developments and product supplies. However, Klein expressed caution about investments in emerging cloud service providers, citing concerns over pre-paying for GPU sales volumes.
Ben Bajarin, an analyst at Creative Strategies, also pointed out that if market cycles reverse, investors may question the authenticity of demand.
Among numerous investments, NVIDIA’s bet on OpenAI has drawn particular attention. At the end of February this year, NVIDIA invested $30 billion in OpenAI, continuing over a decade of collaboration. The initially planned investment amount was as high as $100 billion, but due to OpenAI’s reliance on$Microsoft (MSFT.US)$、$Oracle (ORCL.US)$Amazon for building data centers, the final scale was reduced.
Jensen Huang stated at the time that the $30 billion 'might be the last major investment before the IPO.' In addition, NVIDIA has also participated in financing rounds for AI model companies such as Anthropic and xAI, demonstrating its strategic coverage of the entire industry.
In terms of financial performance, NVIDIA’s investment returns have been exceptionally impressive. Its $5 billion investment in Intel is now worth more than $25 billion, delivering over a fourfold return in just a few months.
In addition, NVIDIA has also invested in $Marvell Technology (MRVL.US)$ 、 $Lumentum (LITE.US)$ 、 $Coherent (COHR.US)$ photonics technology companies such as $CoreWeave (CRWV.US)$ 、 $NEBIUS (NBIS.US)$ , as well as emerging cloud service providers. The value of these companies has also surged amid the AI boom.
Of course, while NVIDIA's investment strategy brings strategic benefits, it also comes with potential risks. On one hand, by investing in downstream customers and partners, the company can secure demand for GPUs and key technologies; on the other hand, if market cycles reverse, the circular investment model could be criticized as 'self-sustaining artificial demand.'
High levels of investment will also impact the company’s financial statements. As the first-quarter earnings report approaches, the scale and returns of the investment portfolio will become a focal point for the market.
Editor/Jayden