Nvidia Had Another Helping of Nebius Stock. Should You Follow Jensen Huang's Lead?

"Nvidia is making good use of its capital by reinvesting across the space. Undoubtedly, the GPU titan has invested in the very firms that buy its chips. But it seems to be investing beyond just its big customers. Notably, the big Groq deal stands out as more of an "acqui-hire" to get a better seat in the AI inference boom."

"Additionally, $2 billion bets on Coherent and Lumentum are more of a bet on the "optical plumbing" of next-generation data centers. These two companies, which are critical infrastructure providers, stand out for fixing connectivity bottlenecks in next-generation data centers."

"For many who lived through the dot-com bust, such rapid-fire dealmaking might be unsettling. It's adding to the circularity, and even if AI isn't in any sort of bubble, it might not take more than the mildest of growth scares to cause a vicious reversal."

Nvidia maintains an aggressive deal-making strategy, making frequent investments across the AI sector despite concerns about potential bubbles reminiscent of the dot-com era. The company strategically reinvests capital in firms that purchase its chips while expanding beyond major customers. Notable investments include the Groq acquisition as an "acqui-hire" to strengthen Nvidia's position in AI inference, and $2 billion bets on Coherent and Lumentum to address optical connectivity bottlenecks in next-generation data centers. CEO Jensen Huang's track record of disciplined investments suggests these strategic moves position Nvidia advantageously for the evolving AI landscape. The company's latest investment targets Nebius, continuing this pattern of securing infrastructure and emerging technology positions.

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