Nvidia's Secret Weapon Is Not Just Chips But Investing $1.5B In AI's Rising Stars: Report Unveils CEO Jensen Huang's 10-Year Vision

Nvidia Corp. NVDA, the posterchild of the AI revolution, did not just capitalize on the rising demand for its AI accelerators but has also flexed its muscle as a venture capital investor in firms leveraging on the technology, a Wall Street Journal report said on Sunday.

What Happened: Nvidia has invested in about three dozen startups, with investments in other companies rising sharply from $300 million a year ago to $1.55 billion at end-January, the Journal report said, citing Dealogic data and company data.

Nvidia’s investment rationale is not getting superlative returns but giving it a toehold in the developing AI trends, as the technology spreads its tentacles into new markets and is used to solve new problems, the report said.

Additionally, the investments help Nvidia “build out the future ecosystem of businesses that depend on its technology” even as rivals are trying to break into the chipmaker’s dominance by embarking on making their own AI accelerators, it added.

Vishal Bhagwati, who leads one of Nvidia's two venture-investment arms, reportedly told the Journal that the uptick in activity wasn't preprogrammed and it flowed naturally from the company's surge to the forefront of the AI boom.

The 13F report for the fourth quarter filed by the company with the SEC in mid-February showed that Nvidia has also built up stake in listed AI-levered companies. The companies in which the Jensen Huang-led company picked up ownership interest are:

• British chipmaker Arm Holdings plc ARM: 1.96 million shares valued at $147.34 million
• Medical imaging systems company Nano-X Imaging Ltd. NNOX: 59,532 shares valued at $379,856
• Recursion Pharmaceuticals, Inc. RXRX: 7.71 million shares valued at $75.99 million; The  biotech develops a drug discovery platform and pipeline with machine learning
• Voice AI and speech recognition company SoundHound AI, Inc. SOUN: 1.73 million shares valued at $3.67 million
• Chinese autonomous trucking company TuSimple Holdings Inc. TSPH: 3.47 million shares valued at $3.04 million

See Also: Best Artificial Intelligence Stocks

Huang Leading The Charge: Huang, who is dubbed as the “Godfather of AI,” sees the tech industry as fast-moving and Nvidia facing the prospect of extinction if it doesn’t invest with a long-term perspective in mind, the report said. The CEO reportedly signs off on every investment deal.

Umesh Padval, a managing director at the venture capital firm Thomvest Ventures who has known Huang for decades, said the Nvidia investment strategy fits with its co-founder's tendency to make bets based on a vision 10 years into the future,” the report said.

Last year, Thomvest along with Nvidia participated in a funding round for Cohere, a Canadian AI company. Nvidia sees customers such as Cohere as source of inputs about features needed in the chips and software to improve next iteration of chips, Padval reportedly said.

Incidentally, in September last, social-media users cried foul over Nvidia deriving much of its second-quarter revenue from the sales of GPUs to CoreWeave, in which the chipmaker is a strategic investor.

In premarket trading on Monday, Nvidia slipped 0.86% to $867.7, according to Benzinga Pro data.

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