Key facts
- Nvidia has invested $23.7 billion in 59 AI-related deals this year.
- The company has invested over $53 billion in 170 AI deals since 2020.
- A recent deal with Microsoft and Anthropic involves up to $10 billion in Nvidia funding.
- Critics worry about circular funding loops where Nvidia invests in customers who then buy its hardware.
- Supporters believe the strategy secures long-term demand and strengthens Nvidia's market position.
Nvidia is accelerating its dealmaking in the artificial intelligence sector, with recent investments and partnerships raising questions among investors and analysts. The company has deployed $23.7 billion into 59 AI-related deals this year alone, surpassing its total for all of 2024 before December. Since 2020, Nvidia has funneled over $53 billion into 170 deals across the AI landscape, from foundational model developers like OpenAI and Anthropic to cloud infrastructure providers such as CoreWeave and Lambda.
A recent significant agreement with Microsoft and Anthropic involves up to $10 billion in Nvidia funding and $5 billion from Microsoft. In return, Anthropic has committed to substantial purchases of Azure compute and Nvidia-powered systems, a structure that critics argue creates a circular funding loop. This pattern, where Nvidia invests in a customer who then commits to buying billions in Nvidia hardware, has led to concerns that demand signals might be artificially inflated, potentially contributing to an AI valuation bubble.
Despite these criticisms, many on Wall Street view Nvidia's strategy as a rational approach to solidify its dominance in the AI revolution. By investing in key players across the AI stack, Nvidia aims to secure future demand, support the development of next-generation AI models, and build a robust competitive moat. Past investments in companies like CoreWeave have already proven fruitful, as these firms became major GPU customers during periods of compute scarcity.
Nvidia is set to report its quarterly earnings, with expectations remaining exceptionally high. Given the stock's sensitivity to AI sentiment, investors will be closely examining the earnings report for clarity on organic demand versus demand influenced by Nvidia's financial engineering.