If there is an AI bubble, it is nowhere to be seen.
Heading into 2025, Nvidia’s biggest problem (NVDA -3.12%)) It’s whether the artificial intelligence (AI) chip superstar can continue to grow at a breakneck pace.
Some investors have argued that an AI bubble is forming, with new technologies following in the footsteps of the earlier bubble, due in part to the dramatic growth of some AI stocks. There’s proof. Nvidia has been the standard-bearer for the AI boom so far after posting multiple quarters of triple-digit revenue growth, and earlier this month warned investors and the broader AI sector that the broader AI sector is still on a long growth slide. There was a news report that should reassure you that you have a road. In front of them.
Image source: Getty Images.
AI startups are on fire
ChatGpt’s creator Openai may be a household name by now, but a lesser-known AI startup is starting to make waves.
It’s Humanity, creator of the Claude AI chatbot, which counts Amazon and Alphabet among its backers and has raised billions of dollars from tech giants. Mankind is currently in talks for a large new funding round, which is a bullish signal for Nvidia and the wider sector as well.
According to multiple media outlets, Mankind underwent high-level consultations in early January and raised its $2 billion price tag to $60 billion, up from a $16 billion valuation less than a year ago.
The news is the latest sign of skyrocketing valuations for privately held AI startups, and a sign of growing investor enthusiasm for AI and how companies like Humanity will justify their valuations over time and ultimately It shows confidence that it will generate billions in profits.
Ultimately, the frenzy surrounding AI startups will likely benefit Nvidia, as a good portion of the $2 billion will likely be spent on Nvidia chips to power humanity’s AI models.
Humankind has a history of collaborating with Nvidia to buy chips, but the company announced last November that it would use Amazon’s training and inference chips to train future foundational models if it cost $4 billion from Amazon. said.
The details of the current funding round are not clear as it has not been closed, but the deal in some capacity is likely due to the fact that it is widely recognized as a leader in AI chip technology and is fully tied to itself. It is possible to demonstrate your abilities. Amazon could make humanity less competitive. Even Amazon Web Services CEO Matt Garman has said that the company views its AI processors as “supplements” to Nvidia’s GPUs rather than replacements.
The funding round should also add fuel to the AI arms race among startups and encourage investors in rival companies to shell out billions more. For example, Openai completed a $6.6 billion funding round in October that valued the company at $157 billion.
Openai is a major customer of Nvidia, and Nvidia CEO Jensen Huang handed over his first H200 AI supercomputer to Openai. The Sam Altman-led startup has a vision of developing its own AI chip, but that’s likely years away. For the foreseeable future, it relies on Nvidia chips, and the recent funding round could mean billions flowing into Nvidia’s coffers. Nvidia is also an investor in the round, potentially strengthening its relationship with the AI startup.
What it means for Nvidia
Large companies such as Amazon are working on their own AI chips, but it will be difficult to dethrone Nvidia, whose market share for data center GPUs is estimated at about 95%. Nvidia continues to innovate rapidly and is preparing the Rubin platform for a more advanced version that was recently released.
Nvidia also benefits from a flat management structure that makes decision-making faster and easier and avoids the kind of whitewashing that plagues competitors like Intel. Finally, Amazon has an advantage over potential rivals like Amazon because it is a dedicated pure semiconductor company, but companies like Amazon have other priorities.
Nvidia’s AI Foundation launched the CUDA parallel computing model, which includes hundreds of software libraries and AI models, likely in 2006, and has shown that it has significant technical advantages. CEO Jensen Huang has long been considered an AI visionary.
Overall, what’s good for AI is good for Nvidia, and the billions flowing to startups with soaring valuations shows that the AI boom and Nvidia’s AI-driven growth still have a long way to go. Masu. Expect Nvidia to provide investors with another strong year in 2025.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of the Motley Fool’s board of directors. Jeremy Bowman has held jobs at Amazon and Navidia. Motley’s Fool has positions in and recommends Alphabet, Amazon, Intel, and Nvidia. The Motley Fool recommends the following options: $27 phone at short Intel in February 2025. Motley’s Fools has a disclosure policy.
