Big Me

Big Three

In the past year Nvidia has been on an absolute tear, with its stock skyrocketing from $265.31 on March 27th, 2023 to $942.89 on March 25th, 2024.

A 255.4% return in 1 year compared to the S&P 500’s 32% in the same timeframe.

Nvidia’s market cap has expanded to $2.36 trillion… For reference:

1. Microsoft, $3.14 trillion

2. Apple, $2.64 trillion

3. NVIDIA, $2.38 trillion

As recently as 2022, Nvidia was outside the top 10 most valuable companies by market cap…

Last week, Jensen Huang, Nvidia’s CEO, announced the B200 (Blackwell) chip that can process tasks up to 30x faster than its predecessor. Nvidia controls ~97.7% of the chipmaking model landscape, with AMD coming in at ~1.8% and Intel at ~0.6%.

Big Spender

When they’re not dominating the AI market, Nvidia invests in artificial intelligence startups through its corporate venture arm, NVentures.

In 2023, NVentures participated in ~45 deals, almost 5x more than in 2022. In addition, Nvidia makes strategic corporate investments through its corporate development arm. Nvidia deployed nearly a billion dollars in investments, making it the most active AI investor in 2023, spending more on AI investments than firms like Sequoia Capital and a16z. NVentures was the fourth largest corporate venture investor across all sectors, behind Microsoft, Softbank, and Alphabet (Google).

The fund invests from Nvidia’s balance sheet, which is cash rich and suitable for big bets.

Milburn Pennybags

One of the major drivers in the transition from a traditional corporate VC to the largest AI investor in the world was a changing M&A landscape.

In 2019, Nvidia was able to acquire Mellanox Technologies for $6.9 billion - the largest acquisition of the year.

In 2022, Nvidia’s $40 billion acquisition of Arm Holdings was denied by regulators over anti-trust concerns. Nvidia decided to invest in Arm’s IPO instead; their stake is worth $147 million as of February 2024.

The failed Arm acquisition was a signal that the tides were turning in large M&A deals, and Nvidia’s response was to become more aggressive as a corporate investor with the intent to find smaller companies that can bring a distinct value add to the Nvidia platform.

Take a look at some of the standout startups in Huang’s back pocket:

• Luma: A startup focused on creating models that can generate 3D objects from text descriptions. The underlying mission is to be a leader in multimodal AI. Raised $43 million in a Series B round after a $20 million Series A round that both saw participation from Nvidia alongside new Series B investor a16z.

• Cohere: An AI foundational model company that aims to compete with OpenAI. Raised $270 million in a Series C round that valued them at $2.2 billion, a milestone achieved in just four years. Participation from Nvidia in both Series B and C rounds.

• Hugging Face: The “GitHub for machine learning and other AI models”. Raised $235 million in a Series D round that valued them at $4.5 billion. Round saw participation from Nvidia alongside other corporates such as Google, AMD, Intel, Amazon and Salesforce.

Keep an eye out for additional strategic investments by the team at Nvidia as they continue to corner the artificial intelligence market…

Dive Deeper:

• Techcrunch article comparing Nvidia AI investments with its rivals

• Financial Times article on Nvidia’s ability to innovate rapidly

• Reuters article on corporate coalitions trying to loosen Nvidia’s grip on the market.