NVIDIA Corporation (NVDA) Stock: Invests $150M in Baseten as AI Inference Race Heats Up

TLDR

• Nvidia invested $150M in AI startup Baseten at a $5B valuation.
• The $300M round was led by IVP and Alphabet’s CapitalG.
• The deal highlights Nvidia’s focus on AI inference beyond hardware.
• NVDA shares traded lower despite strong long-term performance.
• Financial metrics show high margins, cash strength, and premium valuation.

NVIDIA Corporation (NVDA) was trading at $179.43, down 3.59% during market hours, as investors weighed a strategic venture investment alongside broader market moves.

NVIDIA Corporation, NVDA

The semiconductor leader has invested $150 million in AI inference startup Baseten as part of a $300 million funding round that values the company at $5 billion, according to a Wall Street Journal report citing people familiar with the matter.

The round was led by venture capital firm IVP and Alphabet’s CapitalG, with Nvidia participating as a major backer. The investment more than doubles Baseten’s valuation and signals Nvidia’s growing interest in software platforms that sit closer to AI model deployment and inference workloads.

Why Baseten Matters to Nvidia

Baseten focuses on AI inference, the process of running trained models in production. This layer of the AI stack has become a critical battleground as enterprises seek faster, cheaper, and more reliable ways to deploy large models. By backing Baseten, Nvidia extends its influence beyond GPUs and into the infrastructure that developers use to operationalize AI.

The move fits Nvidia’s broader strategy of building a full-stack ecosystem that spans chips, networking, software frameworks, and developer tools. Inference workloads are expected to scale rapidly as AI adoption spreads across industries, making platforms like Baseten strategically valuable.

Market Reaction and Stock Context

Despite the long-term strategic logic, Nvidia shares traded lower on the day of the report. Short-term price moves have often diverged from fundamentals for NVDA, given its size and prominence in global markets.

On a performance basis, Nvidia remains far ahead of benchmarks over longer horizons. The stock is up 3.80% year to date, compared with a 0.59% gain for the S&P 500. One-year returns stand at 30.32%, more than double the index’s 13.48%. Over three years, NVDA has surged 906.72%, while the S&P 500 gained 71.30%. Five-year returns exceed 1,246%, underscoring Nvidia’s dominant run through the AI boom.

Financial Strength Supports Expansion

Nvidia’s balance sheet provides ample flexibility for strategic investments like Baseten. The company holds $60.61 billion in cash with a modest debt-to-equity ratio of 9.10%. Levered free cash flow over the trailing twelve months reached $53.28 billion, supporting both internal growth and external partnerships.

Profitability metrics remain exceptional. Nvidia reports a profit margin of 53.01%, return on assets of 53.53%, and return on equity exceeding 107%. Trailing twelve-month revenue reached $187.14 billion, with net income of $99.2 billion. These figures explain why Nvidia can deploy capital aggressively while maintaining financial resilience.

Valuation Reflects Leadership

Nvidia trades at a premium valuation, reflecting its central role in AI computing. The stock carries a trailing P/E of 46.10 and a forward P/E of 24.33. The PEG ratio of 0.70 suggests growth expectations still outpace valuation for many investors. Price-to-sales stands at 24.46, while enterprise value to EBITDA is 37.59.

Such multiples leave little room for execution missteps, which can amplify short-term volatility around news events. Still, Nvidia’s sustained earnings power and ecosystem expansion continue to justify premium pricing in the eyes of long-term holders.

Strategic Signal For The AI Stack

The Baseten investment highlights Nvidia’s view that control over AI inference platforms is as important as leadership in training hardware. As customers move from experimentation to scaled deployment, inference efficiency will drive costs, performance, and user experience.

By aligning with startups building this layer, Nvidia strengthens demand for its GPUs while embedding itself deeper into customer workflows. The $150 million bet on Baseten may be modest relative to Nvidia’s size, but it sends a clear signal about where the company sees the next phase of AI value creation.

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