Nvidia’s $4.3 Billion Bet: Over 95% Poured Into These 2 Red-Hot AI Stocks That Are Dominating 2025
Nvidia just dropped a bombshell move that's shaking Wall Street—deploying a staggering 95% of its $4.3 billion war chest into just two artificial intelligence players.
Why These Two AI Titans?
The chip giant's massive capital allocation screams conviction in AI's explosive growth trajectory. Forget diversification—this is a concentrated bet on pure AI firepower.
Market analysts are scrambling to decode the strategy behind pouring billions into these specific names while traditional finance still debates whether AI is a bubble or the real deal—classic Wall Street, always a step behind actual innovation.
This isn't just investment—it's a statement. Nvidia's putting its money where the future's being built, leaving slow-moving institutional funds watching from the sidelines.
Image source: Getty Images.
Aside from being the largest publicly traded company, Nvidia is best known for its graphics processing units (GPUs), which act as the brains of AI-accelerated data centers. Nvidia's Hopper (H100) and Blackwell GPUs have accounted for the bulk of AI-GPUs currently deployed by businesses, and there isn't an external competitor that's particularly close to unseating these chips, in terms of compute capabilities.
However, this GPU juggernaut is also an investor. It closed out the June-ended quarter with $4.33 billion in AUM, which was spread across six mostly AI-focused stocks. Yet this spread is anything but equal, with two of Nvidia's six holdings comprising more than 95% of its invested assets.
CoreWeave: 91.4% of invested assets
When the June quarter came to a close, Nvidia's investment portfolio could accurately be summarized as data-center infrastructure services provider(CRWV -4.04%) and five other companies. Inclusive of the 95,113 shares of CoreWeave that were added during the second quarter, Nvidia holds 24,277,573 shares, which at the midpoint of 2025 were worth $3.96 billion!
CoreWeave's operating model is straightforward. It's invested aggressively in AI-GPUs -- it purchased 250,000 of Nvidia's Hopper chips -- with the goal of providing (leasing) its compute infrastructure to businesses that need it. Considering how much money is being spent by businesses on AI infrastructure, CoreWeave is expected to have little trouble finding takers for its services.
It's also in Nvidia's best interests that CoreWeave thrives. CoreWeave depreciates its GPUs over the course of six years, which suggests Nvidia's top investment holding will look to upgrade its hardware in that time span. Nvidia's roughly 5% stake in CoreWeave, coupled with the lure of its CUDA software platform, which helps its clients get the most out of their Hopper and Blackwell GPUs, should keep CoreWeave firmly tied to its ecosystem of products and services.
If CoreWeave simply meets Wall Street's consensus expectations, its sales will catapult from an estimated $5.25 billion this year to a projected $19.55 billion come 2028.
However, CoreWeave's success isn't as guaranteed as its scorching-hot stock run-up since its initial public offering in late March might suggest.
Though it's aggressively building out its data-center infrastructure to lock in long-term, lucrative deals, the cost to purchase AI-GPUs is burdensome. The company is on pace to log north of $1 billion in interest expenses this year, with its full-year net loss tracking about $1.2 billion. Although sales are climbing at a breakneck pace, losses are growing rapidly, as well.
Furthermore, Nvidia's advanced-chip development cycle may be problematic for CoreWeave. Nvidia CEO Jensen Huang aims to bring a new AI-GPU to market annually, which could rapidly depreciate prior-generation GPUs, such as the Hopper. If CoreWeave's assets depreciate faster than expected, or become obsolete quicker than anticipated, it could prove costly.
Image source: Getty Images.
Arm Holdings: 4.1% of invested assets
The other scorching-hot artificial intelligence stock that stands out in Nvidia's $4.33 billion investment portfolio is semiconductor colossus(ARM -5.05%). Nvidia closed out June with the same number of shares of Arm as it had in March (1,101,249), which worked out to a market value of $178.1 million.
Whereas most semiconductor stocks are all about demand for physical hardware, Arm is a unique breed of chip company. All of its revenue derives from royalties and licensing fees tied to its intellectual property (IP) and designs that chip companies (like Nvidia) use when producing GPUs, central processing units (CPUs), and other systems IP.
The primary advantage of being an "architect" and not an actual manufacturer can be observed in the overhead costs. While traditional chipmakers have to worry about a laundry list of supply chain challenges and demand headwinds, Arm Holdings' cost of sales totaled just $30 million in the fiscal first quarter (ended June 30). This compares with $1.053 billion in net sales, which works out to a juicy generally accepted accounting principles (GAAP) gross profit margin of 97.2%.
Steadily growing demand for more energy-efficient AI chips should act as an accelerant for Arm's sales growth in the coming years. Arm's designs should be foundational to reducing costs in enterprise data centers.
In addition, Arm has the benefit of being more than just an AI stock. While AI is viewed as the bulls-eye among growth trends, Arm is leaned on for its IP in CPUs, with its architecture a veritable mainstay in most smartphones. If an AI bubble were to form and burst at some point in the future, Arm might be able to sidestep the worst of the pain.
Arguably the biggest question mark with Arm Holdings is whether it can sustain its eye-popping valuation premium. While there's no doubt Arm's unique position as an IP leader warrants a valuation premium, a forward price-to-earnings (P/E) ratio of 61 might be excessive for a company expected to deliver "only" a sustained growth rate of 20%.
