Why Nvidia Keeps Backing Would-Be Competitors to OpenAI

As we wrote in this story on Tuesday, investors are rushing to back a new crop of research-focused AI labs (dubbed neolabs) hoping to outflank OpenAI and Anthropic. One investor, in particular, is driving most of these new startups: Nvidia.

In Reflection AI’s October fundraising, for instance, Nvidia contributed $800 million out of the $2 billion round, making it by far the largest investor in the round (despite the fact that it shied away from the title of lead investor). More recently, Nvidia told AI startup Poolside that it would invest as much as $1 billion in its ongoing $2 billion funding round, according to Bloomberg. And as we reported on Tuesday, Nvidia, along with Advanced Micro Devices, was in talks to invest in Humans&, the new AI lab founded by ex-xAI researcher Eric Zelikman.

It’s plain to see what’s going on. Nvidia CEO Jensen Huang is conscious of rising competition from the likes of Broadcom and AMD, and he is doing whatever he can to cement Nvidia’s stranglehold on the AI chip market. 

That means diversifying Nvidia’s customer base beyond the biggest users of its graphics processing units today—OpenAI, xAI and Meta. Those firms are hedging their GPU bets by using chips from other firms (OpenAI has pledged to use AMD chips) or developing their own (OpenAI and Meta).