- Nvidia's chips gave the company the impetus to take advantage of the latest AI boom.
- But GPU manufacturers are targeting other areas where AI can be applied.
- Nvidia invested in dozens of startups in 2023, including companies focused on pharmaceuticals.
California-based chipmaker Nvidia is the latest technology company to have a blockbuster year so far. It exceeded expectations and by the end of February had a market capitalization of over $2 trillion.
This makes Nvidia one of the three largest companies by market capitalization, behind Microsoft and Apple.
The company's recent boom can be explained by a very simple formula.
Advances in AI are causing fields beyond technology, such as healthcare and finance, to compete on how to implement the technology. This requires a chip known as a graphics processing unit or GPU that powers the AI technology. Nvidia has the product.
But the focus isn't just on chips. Nvidia is looking for places to leverage its current leverage In the recent AI boom.
The company is expanding its venture capital footprint and investing in startups that apply AI to a wide range of industries.
The chipmaker invested in nearly 30 startups last year, according to an analysis by Dealogic, a data company serving financial companies, shared with Business Insider.
According to the Wall Street Journal, which first reported it, According to Nvidia's investment strategy, this is more than three times the number of investments the company made in 2022.
Nvidia's “ecosystem”
Nvidia's interests range from software to pharmaceuticals to healthcare. According to Cathay Health, a healthcare-focused investment firm participating in the funding round, Moon Surgical received funding in May with venture backing co-led by Sofinnova Partners, an investment arm of NVIDIA, and Nventures. The company reportedly secured $55.4 million.
Nvidia also disclosed in a February SEC filing that it has invested in small and medium-sized companies applying artificial intelligence, including drug discovery company Recursion Pharmaceuticals and voice recognition technology developer Soundhound AI.
Spokespeople for Sofinova Partners and NVentures did not respond to requests for comment sent over the weekend.
The investment appears to have paid off. The magazine cited NVIDIA's financial statements, which showed that the company's investments were about $1.55 billion in January, compared to $300 million a year earlier. Since January 2023, Nvidia stock has soared 239%.
But as the Journal points out, these investments go beyond financial returns.
By investing in AI-focused ventures, Nvidia will further meet demand for the valuable chips it makes and foster what it calls its “ecosystem.”
An Nvidia spokesperson declined to comment, but pointed to a December blog post outlining how the company supports venture companies that “leverage Nvidia technology.”
“NVIDIA's Corporate Investment Division is focused on strategic alliances,” the company said. “These partnerships stimulate joint innovation, strengthen the NVIDIA platform, and expand our ecosystem.”
Nvidia's star CEO Jensen Huang also highlights the growth potential of this ecosystem.
“Biology companies, healthcare companies, financial services companies, AI developers, large-scale language model developers, self-driving car companies, robotics companies…all these startups, large enterprises, healthcare, financial services, automotive, etc. is working on NVIDIA's platform. “We are directly supporting them,'' Huang said during an earnings call in February.
