- NVDA
- SPCX
- ^GSPC
Nvidia (NASDAQ: NVDA) isn’t just the world’s largest company and a leader in accelerated computing; it also has a significant investment portfolio. As of June 30, the value of Nvidia’s equity investment portfolio totaled $63.4 billion. A majority of companies in the S&P 500have market caps smaller than that stock portfolio, a fact that highlights just how much money Nvidia is investing in companies that it believes in and interacts with.
However, Nvidia’s portfolio is far from diversified. It has significant concentrations in a handful of stocks, and its second-largest holding may come as a surprise to some investors: Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX. SpaceX and Nvidia may seem like an odd pairing at first glance, but the more you dig into SpaceX’s whole operation, the more the investment makes sense.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
SpaceX is also an AI company
In January, Nvidia invested $10 billion into xAI during a private funding round. Then in February, SpaceX fully acquired xAI, bringing products like Grok and the social media platform X under its umbrella. That deal gave Nvidia a stake in the larger company that appeared on the chipmaker’s 13F filing after SpaceX went public.
As the leading provider of AI processors, Nvidia has a fairly good bead on which companies are excelling in the artificial intelligence space, so when it chooses to invest a significant amount of money into a company like xAI, it is a clear sign that xAI is a leader in the space. On the flip side, there are also concerns about circular financing, as Nvidia invested $10 billion into SpaceX, but SpaceX will turn around and spend that money on Nvidia’s products. The circular funding loops across the AI space could eventually come crashing down, but there is another factor that needs to be considered here: xAI’s revenue generation.
If xAI can turn into a viable, profitable business collecting subscription revenue and usage fees from clients, then Nvidia’s original investment will make sense. We’re seeing early signs of this as revenue from SpaceX’s AI division rose 247% year over year in the second quarter to $2.56 billion. That was a massive top-line increase, but the segment is still losing money from operations — to the tune of $1.26 billion in the quarter — so it has a ways to go.
