Summary
NVIDIA's key growth factor is its ability to scale, achieved through initiatives like the Inception Program and Venture Capital Alliance Program, which support AI and tech startups.
The company's Deep Learning Institute, Partner Network, and successful acquisitions also contribute to its growth and position as a leader in AI, data science, and high-performance computing.
NVIDIA's business model and ability to scale are not widely discussed, but they provide a long runway for success and should be considered by potential investors.
Justin Sullivan
What is the Goal of this Article?
As my readers know, I like to start out with what is the goal of my article. In this article the goal is to educate shareholders, potential shareholders, and bears on NVIDIA $NVIDIA Corp(NVDA)$ Stock, on what is the key growth factor NVIDIA has become an expert on. NVIDIA’s business model accomplishes this growth factor in several strategic methods that we will review. This part of NVIDIA’s business is not discussed in the media or among analysts enough. It is something NVIDIA has continued to be able to improve and lately perfect by executing on several key strategies. It is this growth factor that I believe gives NVIDIA a long runway for success for decades to come. My position to see this unfold is at least five to ten years, as I am a long-term investor, but anything longer than that period is hard to hypothesize. So, what is this key growth factor that NVIDIA has excelled at over the years? It is scale, now let’s review how NVIDIA continues to achieve this.
NVIDIA's Massive Growth at Scale (NVIDIA Investor Presentation)
The First Hidden Gem: NVIDIA Inception AI Start-up Program
In the fast-paced world of technology, some investment strategies remain hidden gems, and NVIDIA's Inception Program and Venture Capital Alliance Program are shining examples. Spearheaded by visionary CEO Jensen Huang, these initiatives showcase NVIDIA's commitment to fostering innovation, providing scale to their business, and positioning themselves as leaders in the AI, data science, and high-performance computing (HPC) realms.
NVIDIA Inception Program Growth through 2022 (NVIDIA Investor Presentation)
The NVIDIA Inception Program is a virtual accelerator project designed to support startups at the forefront of technological advancement. With over 15,000 startups under its wing, this program offers a treasure trove of opportunities for both entrepreneurs and investors alike. However, the power and potential of this investment strategy remain largely under-appreciated, making it a well-kept secret in the investment landscape.
Under the stewardship of Jensen Huang, the Inception Program has flourished into a thriving ecosystem. Startups participating in the program gain access to exclusive benefits, including networking opportunities, in-house training, and technical support from NVIDIA's team of experts. The program also opens doors to a wealth of industry expertise, collaborative programs, and co-marketing support, allowing these startups to flourish and push the boundaries of AI, data science, and HPC. Now let's review some of these AI startups that have participated in this program that have also led into additional investments by NVIDIA in these early startups.
Lambda Labs GPU Service Offering Powered by NVIDIA (Lamba Labs Website)
Investing in Lambda Labs and CoreWeave represents a shrewd move by NVIDIA to generate significant revenue. The approved membership of Lambda Labs and CoreWeave in the Inception Program is testament to the credibility and promise these startups hold. NVIDIA invested in CoreWeave over $100M this past April, then the company raised another $221M in VC funding and Microsoft $Microsoft(MSFT)$ committed investments that could be worth a billion to them recently this past June. As these companies leverage NVIDIA's hardware, software, and expertise, they stand to achieve exponential growth, and investors who recognize this hidden potential have the opportunity to reap significant rewards.
Inception Program Phases (NVIDIA Investor Presentation)
Lambda Labs, renowned for its AI hardware offerings, and CoreWeave, a leader in high-performance computing, are prime examples of startups destined for greatness. With access to NVIDIA's cutting-edge technologies, they are poised to deliver unparalleled solutions to clients while simultaneously solidifying NVIDIA's position as a powerhouse in the technology space.
But Lambda Labs and CoreWeave are just the tip of the iceberg. NVIDIA's Inception Program also boasts an impressive roster of other startups, each pioneering groundbreaking technologies across diverse industries. For instance, DeepMed.io, a UK-based medtech start-up, utilizes AI to enhance the accuracy and speed of medical diagnoses through histopathology. Its success story reflects NVIDIA's pivotal role in supporting innovation that positively impacts patient outcomes.
Inception Program Success Stories (NVIDIA Investor Presentation)
Chooch, a Silicon Valley-based leader in computer vision, combines generative AI and computer vision to combat wildfires in California. By reducing false positives from wildfire detection systems, Chooch's technology is saving lives and preventing extensive property damage. Such innovative ventures highlight the diverse and impactful applications of NVIDIA's Inception Program.
NVIDIA AI changing Apps (NVIDIA Investor Presentation)
Another prominent member, Space and Time, has gained attention for its data warehousing platform, which blends on-chain and off-chain data for seamless enterprise-scale analytics and fast transactions. This marriage of AI and blockchain technology has the potential to revolutionize multiple industries, further solidifying NVIDIA's position as a catalyst for transformative breakthroughs.
NVIDIA announced the future of NPCs (Non-Playable Characters) in games with the NVIDIA Avatar Cloud Engine (ACE) for Games at COMPUTEX 2023. ACE for Games is a custom AI model foundry service that enables developers to build and deploy customized speech, conversation, and animation AI models in software and games, making NPCs more intelligent and responsive. This AI breakthrough in gaming was co-created with Convai, one of the companies in the NVIDIA Inception Program. This ability of real-time interaction with NPCs in video games is an industry breakthrough that can impact the story and outcomes of how games are played. If you think about the ACE technology mixed with VR, haptics, augmented reality, and the metaverse, the gaming industry can become more immersive and lifelike than ever.
NVIDIA Inception Program Success Stories (NVIDIA Investor Presentation)
Another company, Generative AI Solutions Corp.'s subsidiary, Pulse AI Compute Solutions Inc., has been approved to join the NVIDIA Inception Program and issued a Purchase Order for approximately US$1.8 million of hardware capable NVIDIA solutions.
The possibilities unlocked by NVIDIA's scale in the Inception Program are vast. With a myriad of startups across AI, data science, healthcare, manufacturing, and more, NVIDIA is positioned to benefit from their collective success. As these startups thrive and leverage NVIDIA's cutting-edge technologies, they will further amplify the company's growth trajectory and innovation prowess.
In conclusion, the NVIDIA Inception Program and Venture Capital Alliance Program stand as testament to CEO Jensen Huang's foresight and great leadership. These investment strategies provide scale to NVIDIA's business and offer a vast array of benefits to both startups and investors. As more people become aware of the hidden potential of these programs and the remarkable startups they support, NVIDIA's growth trajectory is set to soar to new heights in the world of technology innovation and investment opportunities.
The Second Hidden Gem: NVIDIA Venture Capital Alliance Program
The NVIDIA Venture Capital Alliance Program further showcases the company's visionary leadership. By forming a strategic alliance with investors worldwide, NVIDIA's Venture Capital Alliance Program encourages funding in startups pioneering cutting-edge technologies. This alliance not only bolsters the startups but also creates a ripple effect, driving growth and innovation across industries. This Venture Capital Alliance focuses on startups building cutting-edge technology with AI, data science, and high-performance computing (HPC).
Customer Testimony on NVIDIA VC Alliance Program (NVIDIA Website)
Investors who join the Alliance gain access to various exclusive benefits, including:
Curated Deal Flow: Members of the Alliance can connect with startups that are actively raising capital through the NVIDIA Capital Connect platform and receive monthly deal flow updates.
Portfolio Support: NVIDIA's Solution Engineering Team provides assistance to portfolio companies, offering go-to-market support, field marketing, and customer engagement opportunities.
Alignment with NVIDIA Investments & Corporate Development: Alliance members and their portfolio companies gain preferred access to NVIDIA's corporate development and investment teams.
Closed Door Events: Investors in the Alliance have the opportunity to participate in exclusive forums with NVIDIA leadership, customer executives, and investment peers.
Additional Program Benefits: Beyond the core benefits, members can explore opportunities to promote their firm across NVIDIA's network, access the NVIDIA Inception startup program, receive AI and data science training through the NVIDIA Deep Learning Institute, work with a dedicated business development manager, and explore various sponsorship opportunities.
The Impact of AI for the Future (NVIDIA Investor Presentation)
Here is what NVIDIA said on this program when it launched it in their 2021 press release.
To better connect venture capitalists with NVIDIA and promising AI startups, we’ve introduced the NVIDIA Inception VC Alliance. This initiative, which VCs can apply to now, aims to fast-track the growth for thousands of AI startups around the globe by serving as a critical nexus between the two communities.
AI adoption is growing across industries and startup funding has, of course, been booming. Investment in AI companies increased 52 percent last year to $52.1 billion, according to PitchBook.
A thriving AI ecosystem depends on both VCs and startups. The alliance aims to help investment firms identify and support leading AI startups early as part of their effort to realize meaningful returns down the line."
The NVIDIA Inception VC Alliance is part of the NVIDIA Inception program, an acceleration platform for over 7,500 startups (now 15,000 in 2023) working in AI, data science and HPC, representing every major industry and located in more than 90 countries.
Among its benefits, the alliance offers VCs exclusive access to high-profile events, visibility into top startups actively raising funds, and access to growth resources for portfolio companies. VC alliance members can further nurture their portfolios by having their startups join NVIDIA Inception, which offers go-to-market support, infrastructure discounts and credits, AI training through NVIDIA’s Deep Learning Institute, and technology assistance.
The Third Hidden Gem: NVIDIA's Deep Learning Institute
The creation of the NVIDIA Deep Learning Institute (DLI) has proven to be a valuable initiative with numerous benefits for NVIDIA's business and the wider community. By offering a comprehensive range of learning resources and training programs, the DLI has become a key driver in advancing knowledge and expertise in AI, accelerated computing, data science, graphics, and simulation.
DLI Workshops (NVIDIA Website)
One of the primary benefits of the DLI is that it empowers individuals, teams, organizations, educators, and students to acquire the necessary skills and understanding of NVIDIA solutions. Through self-paced and live training, learners can access technical industry experts and instructors who are passionate about the latest technology trends. This exposure to expertise enables learners to gain in-depth knowledge and hands-on experience with industry-standard software, tools, and frameworks used in deep learning and accelerated computing applications.
The DLI's live workshops conducted virtually from anywhere, along with flexible online courses, make it convenient for participants to engage in training on their own schedule. This accessibility allows professionals from diverse fields, such as data science, healthcare, robotics, and manufacturing, to learn and apply NVIDIA's technologies in their respective industries.
Breakdown on Some DLI Offerings (NVIDIA Website)
By collaborating with industry leaders and organizations like Deloitte, KENET, and Samsung Electronics, the DLI ensures that its content is designed to meet real-world challenges and promote practical applications of deep learning. Additionally, earning an NVIDIA DLI certificate in select courses demonstrates subject matter competency, supporting professional growth and recognition.
The availability of GPU-accelerated servers in the cloud and access to production-quality solutions through the DLI's base environment containers streamline the learning process, reducing time to production for learners looking to apply their skills to real-world projects.
New Opportunities Due to Generative AI (NVIDIA Investor Presentation)
Overall, the NVIDIA Deep Learning Institute has positioned NVIDIA as a leader in providing advanced education and training in the field of AI and accelerated computing. By empowering learners across different sectors and industries, the DLI has a positive impact on the adoption and application of NVIDIA's solutions, fostering innovation and driving growth in the AI ecosystem. As more individuals and companies gain proficiency in NVIDIA's technologies through the DLI, it not only strengthens NVIDIA's position as a provider of cutting-edge solutions but also expands the reach and impact of AI-driven advancements in various domains.
The Fourth Hidden Gem: NVIDIA's Partner Network
The NVIDIA Partner Network offers a diverse array of partner types, each playing a crucial role in delivering NVIDIA technologies to businesses and customers. From Cloud Service Providers to Global Systems Integrators and Independent Software Vendors, these partners form an intricate network that amplifies NVIDIA's reach and impact.
Competencies that Drive Differentiation: To thrive in a competitive landscape, NPN Partners participate in specialized competencies that set them apart in the marketplace. These competencies validate their knowledge and expertise in key advanced technologies, allowing them to cater to the specific needs of their customers and target markets effectively.
NVIDIA Partner Types (NVIDIA Website)
The competencies encompass a wide spectrum of NVIDIA's offerings, including Compute, DGX AI Compute Systems, Embedded Compute, Networking, AI, HPC, Omniverse, Virtual Desktops, and Visualization. By honing their skills in these areas, partners can better serve their clientele and deliver innovative solutions.
Partner Tiers: Registered, Preferred, and Elite: The NVIDIA Partner Network operates on a tiered structure, offering different levels of engagement and rewards. At the entry level, the Registered partner gains access to NVIDIA sales and technical training, as well as essential product, sales, and marketing tools. This foundation serves as a steppingstone for further growth within the network.
FS Joining NVIDIA Partner Network (FS Press Release)
The Preferred partner signifies a deeper commitment to the partnership, as these partners achieve training, revenue, and other goals that unlock special benefits and opportunities. Their dedication enables them to better understand and cater to their customers' unique requirements, driving mutual success.
At the pinnacle of partnership lies the Elite tier, reserved for those partners who exemplify the highest level of commitment to visual computing. These elite partners not only possess an unparalleled understanding of NVIDIA technologies but also demonstrate a steadfast dedication to their customers, delivering exceptional solutions and services.
Fueling Success Through Collaboration: The NVIDIA Network Partner Program exemplifies the power of collaboration, enabling partners to leverage NVIDIA's expertise while enhancing their own capabilities. This symbiotic relationship translates into exponential scale and stickiness for both NVIDIA and its partners.
By combining forces with partners across various industries and sectors, NVIDIA gains access to new markets and customers, driving innovation and expanding their reach. On the other hand, partners benefit from NVIDIA's cutting-edge technologies and resources, elevating their offerings and solidifying customer loyalty.
NVIDIA's Business Flywheel (NVIDIA Investor Presentation)
As technology continues to evolve, partnerships play an increasingly vital role in fueling growth and innovation. The NVIDIA Partner Network stands as a testament to the immense value of collaboration, fostering a thriving ecosystem that drives success in the face of ever-changing market dynamics. Through diverse partner types, specialized competencies, and multi-tiered engagement, the NPN empowers its partners to create a brighter, more connected future with the power of visual computing.
The Final Hidden Gem: Successful Acquisitions
NVIDIA has proven time and time again of completing successful acquisitions that have created growth opportunities but more importantly these all were puzzle pieces aligned to the CEO's vision of making NVDIA the first ever Compute as a Platform/AI Company. Some of the successful acquisitions NVIDIA has made over the years include Mellanox Technologies, 3dfx Interactive, MediaQ, and Hybrid Graphics.
Success of Mellanox Acquisition (NVIDIA Investor Presentation)
Now, NVIDIA potentially could be taking a large investing position in the ARM IPO coming soon, even after their failed acquisition attempt due to the denial from the European Union Commission. This illustrates the value that NVIDIA believes they can create with a closer relationship with ARM who owns a large market share position in Edge and IOT semiconductors.
I could go into more detail of this final hidden gem, but if you have made it this far in the article, you know it is getting too long, and your time is valuable. All you have to look at to see the proof in NVIDIA's success in innovation and acquisitions is their expanding revenue and margins in business segments such as Data Center, Visualization, and Automotive. These were not part of their business 10 years ago and I believe they will have more business segments driving revenue in the next 10 years, due to these five hidden gems.
NVIDIA's Market Opportunity (NVIDIA Investor Presentation)
Conclusion
NVIDIA has demonstrated through these five hidden gems, that it has been brilliant in creating scale to their business through partnering, investing, co-creating, and teaching their customers and partners their technologies to solve real-world problems. The statistics of successful scale NVIDIA shares via this quote on their Timeline portion of their website proves they have been scaling successfully for a long-time and should continue to do so.
NVIDIA's Accelerated Computing Platform (NVIDIA Investor Presentation)
For more than 30 years, scientists, researchers, developers, and creators have been using NVIDIA technology to do amazing things. More than 4 million developers now create thousands of applications for accelerated computing. More than 40,000 companies use NVIDIA AI technologies, with 15,000 global startups in NVIDIA Inception."
NVIDIA has also been consistent in executing Jensen Huang's vision of being the dominant compute platform advancing the world in AI, HPC, gaming, creative design, autonomous vehicles, and robotics. All of these areas of business are emerging markets in their own right and may have a long runway for growth for decades to come.
NVIDIA Market Platform Overview (NVIDIA Investor Presentation)
So hopefully this article was educational for you and you were able to take away something new you did not know about NVIDIA's business model and ability to scale. Now it is your turn to do the homework and see if you agree with my thesis and if it is the right investment for you, depending on your financial goals and time horizon.
Source: Seeking Alpha
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