Nvidia (NVDA +0.79%) runs an artificial intelligence (AI) empire. You might think of the company as an AI chip designer, making the graphics processing units (GPUs) needed for key AI tasks like model training. But Nvidia has expanded beyond the chip to create entire systems and designs platforms for specific industries, such as healthcare. On top of this, the company aims to play a role in every part of the AI ecosystem, and that's reflected in its latest move: its offer to acquire AI open-source platform Hugging Face.
All of this suggests Nvidia has a keen understanding of the AI space, offering it the ability to identify other companies likely to excel. And those companies may be found in Nvidia's investment portfolio. The AI giant right now is invested in eight companies, according to its latest 13F filing to the Securities and Exchange Commission.
My prediction is that one of these players, a company that's hiding in plain sight, will be the next Nvidia-backed stock to go parabolic. Let's check it out.
Image source: Getty Images.
Nvidia's understanding of the AI industry
As mentioned, Nvidia, thanks to the broad role it plays in AI, has what it takes to identify potential winners in the space. The company understands the products and services likely to drive the next phases of the AI boom and works with a variety of other AI players across specialty areas. These partnerships have helped Nvidia get to know every angle of the AI story.
Now, let's consider the Nvidia-backed stock that could be set to soar. And this player is CoreWeave (CRWV -0.27%), a specialized cloud company that has been working closely with Nvidia for several years. CoreWeave's business is actually very closely linked to demand for Nvidia's GPUs: CoreWeave offers customers access to these top chip systems. The company has built up a fleet of Nvidia GPUs, and customers can rent them for a short period of time or for a long-term project.
NASDAQ: CRWV
Key Data Points
This has proven to be an excellent business, with CoreWeave's revenue soaring. In the latest quarter, revenue surged 112% to a record high of $2.6 billion, and backlog reached $104 billion. And the company said it won more than $25 billion in net new customer commitments in the early days of the third quarter.
"Our near-term capacity remains effectively sold out," chief executive officer Michael Intrator said during the recent earnings call. "That is translating into signed commitments on increasingly favorable terms from a broadening set of customers and is positioning CoreWeave to gain market share for years to come."
A close relationship with Nvidia
CoreWeave, due to its close relationship with Nvidia, has been the first to make the chip giant's new systems -- from Blackwell to Blackwell Ultra -- generally available to customers. And Nvidia has even pledged to buy any capacity through April 2032 that hasn't been used. So Nvidia clearly has confidence in CoreWeave's prospects.
Investors have worried about CoreWeave's debt, something that's been necessary to build out infrastructure. In the latest quarter, the company's loss deepened, and interest expenses climbed to $640 million from $267 million in the year-earlier period.
But it's important to note that this investment is necessary for the company to keep up with demand and generate growth. So what does this mean for you as an investor? CoreWeave is an investment that involves some risk, so if you're a cautious investor or focus on value stocks, this probably isn't the right choice for you.
If you're an aggressive investor, though, you might give CoreWeave a second look. The company, as a key partner of Nvidia, is well-positioned to gain ground in the high-growth field of AI. It's already demonstrated enormous growth, and the message from leaders throughout the market is that AI demand is going strong. This is likely to continue as AI is applied to more real-world uses.
And that's why I predict that the next Nvidia-backed stock to go parabolic, a company hiding in plain sight, is CoreWeave.
