Semiconductor giant Nvidia (NVDA) is on an investing spree. From pouring money into the UK data center startup Nscale to the game-changing investment in struggling U.S. chipmaker Intel (INTC), Nvidia is making aggressive moves to capture growth opportunities presented by the ongoing artificial intelligence (AI) boom. According to CNBC, Nvidia has invested $900 million in a cash and stock transaction to hire AI hardware startup Enfabrica’s CEO Rochan Sankar and team as well as to license its technology.
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Nvidia Invests in Enfabrica amid AI Push
Founded in 2019, Enfabrica’s technology can connect more than 100,000 graphics processing units (GPUs) together. Nvidia can capitalize on Enfabrica’s tech to offer integrated systems around its GPUs.
Interestingly, Nvidia previously invested in Enfabrica via a $125 million Series B round in 2023, led by Atreides Management. Reportedly, Enfabrica’s valuation in the Series B round marked a fivefold increase from its Series A funding.
In November 2024, Enfabrica stated that it raised $115 million in new funding as part of an “oversubscribed” Series C equity financing round, led by Spark Capital. Aside from existing investors, new investors like Arm Holdings (ARM), Cisco Investments (CSCO), and Samsung Catalyst Fund also joined the funding round.
NVDA Bolsters AI Dominance
Nvidia is seen as one of the major beneficiaries of the generative AI boom. The company leads the AI chip market with robust demand for its advanced GPUs. Nvidia is further bolstering its dominance in the AI market by capturing opportunities in sovereign AI and making strategic investments.
The most notable one is the $5 billion investment in Intel, with the two chip companies agreeing to bring together Nvidia’s AI and accelerated computing stack and Intel’s CPUs and x86 ecosystem. INTC stock rallied 23% yesterday on the news, while Nvidia stock closed 3.5% higher.
Stifel analyst Ruben Roy views the NVDA and INTC collaboration “positively” for both companies, as it combines Intel’s long-standing expertise in the x86 compute architecture with Nvidia’s GPU leadership. In particular, the 5-star analyst believes that this deal will enable Intel to participate in higher-density rack-scale AI infrastructure, which has been lacking for the company.
Is NVDA Stock a Good Buy?
Wall Street has a Strong Buy consensus rating on Nvidia stock. The average NVDA stock price target of $211.25 indicates 20% upside potential from current levels. NVDA stock has risen more than 31% year-to-date.
