Artificial Intelligence (AI) Titan Nvidia Has Scored a $4 Billion "Profit" in an Unexpected Way

Core Insights - The article highlights Nvidia's significant role in the AI revolution, emphasizing its unique position in the market and the substantial profits it has generated through both operational activities and strategic investments [3][11][12] - Nvidia's market capitalization surged from $360 billion to over $3.5 trillion, marking an unprecedented increase in valuation within a short time frame [5] - The company has achieved a gross margin in the 70% range, driven by high demand for its AI hardware, particularly its Hopper and Blackwell GPUs, which command premium prices due to supply constraints [7][8] Nvidia's Financial Performance - Nvidia's data center segment sales increased by 383% from fiscal 2023 to fiscal 2025, with adjusted net income soaring from $8.4 billion to $74.3 billion during the same period [10] - The company reported a $4 billion unrealized profit from its investment in CoreWeave, reflecting the substantial appreciation of its stake in the AI-data center infrastructure company [15][16] Investment Strategy - Nvidia has invested over $1.1 billion across several publicly traded companies, with its largest holding being CoreWeave, where it has invested a total of $350 million [12][14] - The investment in CoreWeave has yielded significant unrealized gains, although the actual profit may fluctuate based on market conditions [15][16] Market Dynamics - Nvidia's CEO aims to maintain the company's competitive edge by introducing new advanced chips annually, which could impact the market for its existing products [8] - CoreWeave's reliance on Nvidia's GPUs and its substantial purchase of 250,000 Hopper GPUs highlight the interdependence between the two companies [19] Risks and Concerns - There are concerns regarding CoreWeave's sustainability, particularly its high valuation of $88 billion and reliance on debt for GPU acquisitions, which could lead to financial strain [21] - Nvidia's aggressive innovation cycle may depreciate CoreWeave's existing assets, potentially affecting its future profitability [20][21]