Nvidia Stock Rises on Report It’s Investing in Elon Musk’s xAI

Nvidia is the world’s most valuable company with a market cap of $4.5 trillion. (David Paul Morris/Bloomberg)

Key Points

• Nvidia’s stock rose 1.5% in early trading Wednesday, potentially ending a three-day losing streak.
• Nvidia may invest up to $2 billion in Elon Musk’s xAI, according to a report citing informed sources.
• Bank of America analysts maintained a Buy rating on Nvidia, stating concerns about vendor financing are “highly overstated.”

Nvidia stock was rising early Wednesday. The leading AI chip maker was on track to snap a three-day losing streak after a report that it could invest in Elon Musk’s xAI.

Nvidia is one of the backers, and could invest as much as $2 billion in the privately held AI start-up, according to Bloomberg, citing people with knowledge of the matter. It would be the latest move by the chip maker to help accelerate its customers’ investment in AI, including in Nvidia’s products.

Barron’s has reached out to Nvidia and xAI for a comment.

Nvidia recently announced deals with OpenAI and Intel sparking a debate about the circular nature of deals with customers. Bank of America analysts see these concerns as “highly overstated.”

“AI success has little to do with vendor financing, and significantly more dependent on practical pace of data center construction and reliable access to utilities,” analysts led by Vivek Arya wrote in a note dated Monday. Arya maintained a Buy rating on Nvidia and peers Advance Micro Devices and Broadcom , with a price target on the former of $235.

Nvidia shares were up 1.5% in early trading Wednesday, following a 0.3% drop Tuesday. Coming into the trading session, year to date gains stand at 38%, while the S&P 500 has gained 14% over the same period.

The S&P 500 was up 0.1% early Wednesday. The benchmark index fell 0.4% Tuesday after a 7-day winning streak.

Write to Elsa Ohlen at elsa.ohlen@barrons.com