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Based on an annual cash flow of 142 trillion won... Concerns also raised about 'circular transactions' for investments in client companies
NVIDIA, the No. 1 artificial intelligence (AI) chip company, is reportedly taking on the role of an AI company investor.
NVIDIA has made equity investments totaling $40 billion (approximately 58 trillion won) across the entire AI infrastructure this year alone, U.S. financial broadcaster CNBC reported on the 10th (local time), citing an analysis of disclosure documents.
The largest portion of this was OpenAI, with an investment of $30 billion, and it also included Anthropic and Elon Musk's AI company xAI, among others.
In addition, it invested in data center operator Iren, glass and optical fiber manufacturer Corning, and companies with optical technology such as Marvell, Lumentum, and Coherent.
It also provided funding to emerging AI cloud companies, dubbed 'NeoCloud,' such as CoreWeave and Naveen, which are its AI chip clients.
NVIDIA also invested $17.5 billion in unlisted companies and infrastructure funds in the last fiscal year.
Consequently, the value of NVIDIA's unlisted shares on its financial statements reached $22.25 billion as of the end of January, soaring more than sixfold from $3.39 billion a year earlier.
Appreciation gains on listed stocks were also recorded at $8.92 billion, which was driven by the performance of its investment in Intel announced last September.
NVIDIA's aggressive investment strategy is interpreted as a move to support demand for its chips and the entire AI supply chain.
CEO Jensen Huang appeared on a podcast last month and explained the investment policy, saying, 'There are so many great and amazing foundation model companies, and we try to invest in all of them. We don't pick winners. We have to support everyone.'
Such investments are consistent with CEO Huang's long-standing analogy of the AI industry as a five-layer cake consisting of energy, chips, infrastructure, models, and applications, emphasizing that higher layers generate more added value.
NVIDIA's investments appear to stem from its enormous cash flow, based on its overwhelming market share. NVIDIA generated $97 billion (approximately 142 trillion won) in free cash flow in the last fiscal year alone.
However, some express concerns that NVIDIA's investments are similar to the circular trading that fueled the past 'dot-com bubble.'
Matthew Bryson, an analyst at Wedbush Securities, pointed out that NVIDIA's investment actions 'perfectly fit circular investing,' while Jordan Klein, a semiconductor analyst at Mizuho, gave a skeptical assessment, calling the investment in NeoCloud in particular 'questionable.'
CEO Huang emphasized during the earnings call in February that 'our investments are very clearly and strategically focused on expanding and deepening the scope of the (AI) ecosystem.'
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