Nvidia doubles down on AI with Cohere bet

Nvidia is riding the AI wave that is capturing tech—and the chipmaker is making bigger bets into startups as it grows.

Publicly listed Nvidia briefly hit a $1 trillion market cap after reporting record revenues for its AI-centered graphics chips amid a boom fueled by interest in OpenAI's ChatGPT and Google's Bard generative AI chatbots, briefly putting it within the same league as tech giants Apple and Microsoft.

With Nvidia's participation Thursday in a  $270 million Series C for generative AI startup Cohere, one of OpenAI's biggest direct competitors, the company is making its biggest push yet into venture capital, focusing on generative AI's future to further cement itself among the big tech players. It's the second time this year Nvidia has invested in the startup.

Nvidia has taken a bolder approach to startup investments within the last six months, according to PitchBook data. The five largest VC deals that Nvidia participated in since 2018 all occurred this year.
   
Cohere creates AI language models for enterprise clients, and its latest round brings its valuation to around $2.2 billion, Bloomberg reported. Nvidia also has invested in Skydio, a producer of AI-enabled drones, and Adept, a startup that also creates language models for AI.

Matt Bryson, an analyst who covers Nvidia at private investment firm Wedbush Securities, expects the company to diversify its startup investments and not focus only on generative AI.

"There is a land grab going on now in generative AI," said Bryson. "But from a scale perspective, Nvidia has also changed significantly just over the past few months: They have significant runway ahead and will continue to grow into the areas they see as promising."

Nvidia's investment in Cohere's latest round pales in comparison, however, to Microsoft's $10 billion partnership with OpenAI—though it does follow a trend of the big companies choosing horses in the generative AI race. Alphabet most recently participated in a $450 million round into Anthropic, a startup also creating AI foundation models, while Amazon has launched a suite of generative AI tools called Bedrock for its cloud business practice AWS.

Unlike some of the other bigger tech companies, Nvidia has investments and interests in several different areas, including healthcare and autonomous vehicles, Bryson said. Having initially started as a video game graphics-card company, Nvidia has branched out over the last few years into making chips for data centers and autonomous vehicles.

Featured image of Nvidia founder and CEO Jen-Hsun Huan by jamesonwu1972/Shutterstock

This article originally appeared on PitchBook News