Nvidia’s strategic investments in companies like CoreWeave and Navitas Semiconductor underscore its pivotal role in shaping the technology landscape, particularly in AI and semiconductor advancements. While Nvidia’s stock may have slowed in momentum, the focus on smaller companies it backs could present compelling opportunities.
Should you consider investing in smaller companies Nvidia is backing?
Investing in Nvidia-backed companies can be a smart play if they align with Nvidia’s core business areas and are poised to benefit from Nvidia’s ecosystem and market leadership. However, smaller companies often exhibit greater volatility and risk, so due diligence is essential.
CoreWeave vs Navitas Semiconductor
CoreWeave:
Strengths: CoreWeave specialises in GPU cloud infrastructure, a rapidly growing market driven by demand for AI and high-performance computing. Nvidia’s increased stake reflects confidence in CoreWeave’s growth trajectory.
Risks: The competitive cloud infrastructure landscape includes major players like AWS and Azure. CoreWeave’s success will depend on carving out a niche and scaling operations.
Navitas Semiconductor:
Strengths: Navitas focuses on gallium nitride (GaN) semiconductors, which are more efficient and compact than traditional silicon-based chips. The partnership with Nvidia signals potential for broader adoption of GaN technology in AI and data centre applications.
Risks: Navitas is still scaling, and its valuation has surged significantly, which may lead to near-term volatility. Its future hinges on successful integration with Nvidia’s ecosystem and broader market acceptance of GaN technology.
Which to invest in?
Both companies have significant upside potential, but their risk profiles differ. If you believe in the long-term growth of AI infrastructure, CoreWeave might be more appealing. If you see transformative potential in GaN technology, Navitas could be a better bet.
Planning your investment
Instead of choosing one, consider diversifying across both to mitigate risks. Additionally, align your choice with your investment horizon and risk tolerance. These investments should ideally be part of a broader, diversified portfolio to balance exposure to high-growth but high-risk opportunities.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
