Critics call Nvidia's investing circular financing: it invests in a startup, the startup buys Nvidia chips, and Nvidia books the revenue. Fortune notes that in July reports said Nvidia was weighing a $250 billion financing guarantee for an OpenAI data center in Ohio, which knocked about 5% off its shares on July 27; Nvidia later cut the guarantee to about $105 billion.
Huang says Nvidia invests "a small percentage of ultimately what the company has to raise" and calls its approach disciplined, adding that "everybody we invest in is connected into Nvidia's ecosystem." At a September conference he said Nvidia invests only after a company has real customer revenue contracts. The strategic question is whether demand from the invested companies holds if their own funding tightens.
Source: Fortune