In the age of artificial intelligence (AI), Nvidia (NVDA 6.18%) has come to be the defining stock of the era, and not just because of what companies it owns. The chipmaker, which is best known for its graphics processing units (GPUs), has seen skyrocketing demand for its products since the launch of ChatGPT since its chips have been well suited to meeting the kind of intense computing demands that are necessary to run generative AI models.
Much of Nvidia's growth has come organically, but acquisitions have also played a role in its expanding semiconductor empire. Although there isn't a single acquisition that has defined the company's growth (that could have been Arm Holdings (ARM 4.11%), but regulators blocked the $40 billion deal), it has absorbed a number of smaller companies over its history, and more recently made headlines for taking minority stakes in several promising AI companies.
Below, we'll take a look at how Nvidia stock has grown through acquisitions and how those deals fit into its current business.
Semiconductor
List of companies
What companies does Nvidia own?
Nvidia's subsidiaries aren't exactly household names, but they have played a significant role in its evolution, running the gamut from AI companies to chip designers. Keep reading to see which companies are on the list.
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1. OmniML, 2023, 100% ownership
Nvidia's most recent full-on acquisition was AI start-up OmniML, which included technology that helps miniaturize machine learning applications, such as large language models, so they can run on devices like computers, smartphones, and other end-user devices, known as edge devices.
Nvidia didn't publicly announce the acquisition, a sign that it may not have wanted it to attract attention.
OmniML had just announced a partnership with Intel (INTC -9.2%) the month before Nvidia made its acquisition. It's unclear if the deal will unwind the Intel partnership, but it seems likely, considering that Intel and Nvidia are close competitors in AI.
Nvidia dominates the data center market in AI, but the edge market is a dogfight at the moment, with several chipmakers fighting for market share. The OmniML acquisition could give Nvidia an advantage.
It's unclear how much Nvidia paid for OmniML.
2. Excelero Storage, 2022, 100% ownership
In March of 2022, Nvidia acquired Excelero, an Israeli company founded in 2014 that specializes in providing high-performance storage solutions. It's known for its flagship product, NVMesh, which helps provide scalable and low-latency storage solutions.
Excelero has strengthened Nvidia's capabilities in AI and high-performance computing (HPC), and it has been an Nvidia partner since its early days. Given that relationship, the acquisition made sense for Nvidia.
3. Bright Computing, 2022, 100% ownership
Bright Computing is yet another leader in high-performance computing systems to fall under Nvidia's umbrella. Nvidia sees it playing an important role in areas like accelerated computing, GPUs, networking, its CUDA parallel computing platform that makes using GPUs for general-purpose computing easy, and its DGX systems, which are Nvidia's line of servers to accelerate deep learning applications.
Acquisitions like the Bright Computing deal show Nvidia's suite of AI-focused products is the result of a smart mergers and acquisitions strategy and its own product development.
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4. Swiftstack, 2020, 100% ownership
In 2020, Nvidia made another acquisition to help build its supercomputer strategy -- SwiftStack. The software-defined storage platform helps organizations store large volumes of unstructured data.
Like some of Nvidia's other acquisition targets, SwiftStack was expected to help Nvidia with AI, high-performance computing, and accelerated computing.
It was unclear how much Nvidia paid for SwiftStack, although it had raised $23.6 million in its first two funding rounds and serves customers like PayPal (PYPL 2.9%), Verizon (VZ 1.17%), and Nvidia.
5. Mellanox Technologies, 2019, $6.9 billion, 100% ownership
The biggest acquisition in Nvidia's history was its $6.9 billion purchase of Mellanox, which was known for its high-performance networking technology. At the time of the acquisition, Nvidia CEO Jensen Huang argued that Mellanox would fill out the company's end-to-end technologies, from AI computing to networking.
Nvidia also said it would unite the leaders in processing and interconnecting in high-performance computing, which played a key role in Nvidia's development of its AI technology and its emphasis on accelerated computing, which has paid off for the company and investors.
6. Soundhound AI, 2023, $1.7 million, 0.6% ownership
Nvidia revealed several investments in AI stocks in its 13-F filing in February 2024. One of the more intriguing was Soundhound AI (SOUN 5.77%), a maker of audio AI technology that can perform tasks that include speech recognition, text-to-speech, and song identification.
Nvidia made a small investment in Soundhound in the fourth quarter, buying $1.73 million worth of stock, but the value of its investment has gone up considerably since then.
Since Soundhound is more of an application-based, consumer-facing AI company, it seems unlikely that the two companies would work directly together, but Nvidia could expand into new markets where Soundhound's technology could apply.
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7. Arm Holdings, 2023, $147.3 million, 0.2% ownership
Nvidia tried to buy chipmaker Arm Holdings in 2020, but the deal was blocked by regulators. The two have been close partners since then, as Nvidia licenses Arm's architecture for products like the Grace Hopper H200 Superchip.
Arm is known for making efficient CPUs that consume less power than competitors like the x86 from Intel or AMD (AMD 2.37%). That's why Arm's designs are in 99% of smartphones and why its architecture is prized for running AI applications in data centers, which are especially power-hungry.
Nvidia's bet on Arm has already paid off. The stock soared on its fourth-quarter earnings report, and it wouldn't be surprising to see Nvidia build its stake in Arm over time.
8. Recursion Pharmaceuticals, 2023, $50 million, 3.4% ownership
Nvidia announced a $50 million investment in Recursion Pharmaceuticals (RXRX 3.57%) in July 2023. Recursion is a biotech firm known for using artificial intelligence models for drug discovery, and the announcement led Recursion stock to jump 80% as investors interpreted the news as a clear stamp of approval for Recursion from the AI leader.
The two companies will also partner to train Recursion's AI models on Nvidia's cloud platform, which can then be licensed on BioNeMo, Nvidia's generative AI-based drug discovery engine that it launched in 2023.
Nvidia has increasingly touted its potential in healthcare, especially in areas like drug discovery, so it wouldn't be surprising to see the company make more moves like this one or strengthen its relationship with Recursion in the future.
9. Nano-X Imaging, 2023, $380,000, 0.1% ownership
Nvidia also revealed a stake in Nano-X Imaging (NNOX 0.45%), a company that seeks to disrupt conventional X-rays with its digital imaging technology.
However, Nvidia didn't buy shares in Nano-X directly. Instead, Nvidia acquired the stake because its venture fund bought shares of Zebra Medical in 2017, which was acquired by Nano-X in 2021 in an all-stock deal worth roughly $200 million.
However, Nvidia's decision to hold onto those shares acts as a kind of endorsement for Nano-X, which has struggled since an initial pop after it went public. Nano-X ownership of Zebra Medical gives it exposure to AI since the company uses AI algorithms to find undetected signs of chronic diseases.
Nvidia's stake in Nano-X is tiny, but if its technology does pay off, there's a lot of upside for Nvidia.
Potential future acquisitions
What companies could Nvidia buy in the future?
Given its acquisition history and its recent minority investment, there is a wide range of companies that Nvidia could potentially acquire.
The company clearly sees healthcare as a burgeoning field in AI, so it wouldn't be surprising to see it make more acquisitions in the health tech field.
Additionally, more acquisitions that would help the company strengthen its technology in accelerated computing also seem likely.
Finally, Nvidia is launching PC chips for the first time, extending its leadership position in AI into PCs, and making an acquisition that would help that initiative also makes sense. Nvidia will again use Arm designs for the chipsets.
It's difficult to identify individual companies that Nvidia could purchase since those range from start-ups to established publicly traded companies, but investors should expect Nvidia to continue to strengthen and diversify its positioning in AI through acquisitions.
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The bottom line on companies that Nvidia owns
Nvidia owns a wide array of subsidiaries dating back to the company's early history, and those have played a key role in making the company one of the most valuable in the world.
These days, Nvidia is squarely focused on artificial intelligence, and almost all of its recent acquisitions have played a role in burnishing its AI credentials, whether by improving AI technology or entering new markets.
Given the company's market-leading position in AI hardware, we're likely to see more acquisitions from Nvidia in the coming years.
FAQ
Companies Nvidia owns: FAQ
What companies did Nvidia buy?
Nvidia has made several acquisitions in its history.
The biggest was its purchase of Mellanox for $6.9 billion in 2019. Mellanox is a supplier of key networking technology like end-to-end high-speed Ethernet and InfiniBand interconnect solutions.
Nvidia has tried to acquire chip-design company Arm for $40 billion in 2020, but that deal was blocked by regulators. Instead, Nvidia bought a minority stake in Arm once it went public.
Among the other companies Nvidia owns are OmniML, SwfitStack, Bright Computing, and Excelero Storage.
What is Nvidia's main product?
Nvidia is best known for its graphics processing unit (GPU), which underpins top-selling products like H100 Superchip.
Nvidia invented the GPU in 1999, which initially drove the growth of the PC gaming industry. These days, Nvidia GPUs are highly valued for running AI applications like ChatGPT and other large language models, which have enormous computing demands.
Nvidia has an estimated 98% share of the data center GPU market, giving it a virtual monopoly in a rapidly growing business.
Who owns Nvidia?
Nvidia has been public since 1999, and many of its biggest shareholders are insiders like CEO Jensen Huang.
As of April 3, 2023, Huang owned 86.4 million shares of the stock, or 3.5% of the company, worth roughly $80 billion today.
Some of its biggest institutional shareholders include the Vanguard Group, which owns 204.6 million, or 8.3% of the company; BlackRock, which owns 179.8 million, which has a 7.3% stake in Nvidia; and FMR, which owns 138.7 million shares, giving it 5.6% ownership of Nvidia.
How much of the market does Nvidia own?
The semiconductor market is vast and diversified, but Nvidia dominates the market of GPUs. It has an estimated 80% share of the global GPU semiconductor market, and an estimated 98% share of data center GPUs, which are used to run high-powered AI models.
Jeremy Bowman has positions in PayPal. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and PayPal. The Motley Fool recommends Intel and Verizon Communications and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, short March 2024 $67.50 calls on PayPal, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
