By funding and backstopping CoreWeave, which exclusively uses its GPUs, NVIDIA establishes its hardware as the default for the AI cloud. This gives NVIDIA leverage over major customers like Microsoft and Amazon, who are developing their own chips. It makes switching to proprietary silicon more difficult, creating a competitive moat based on market structure, not just technology.

NVIDIA is moving "up the stack" from chips to an AI agent software platform to diversify its business and create a new moat beyond its CUDA system. By courting enterprise partners, NVIDIA aims to maintain infrastructure dominance even if AI labs succeed with their own custom silicon, reducing reliance on NVIDIA GPUs.

Tech giants often initiate custom chip projects not with the primary goal of mass deployment, but to create negotiating power against incumbents like NVIDIA. The threat of a viable alternative is enough to secure better pricing and allocation, making the R&D cost a strategic investment.

Seemingly strange deals, like NVIDIA investing in companies that then buy its GPUs, serve a deep strategic purpose. It's not just financial engineering; it's a way to forge co-dependent alliances, secure its central role in the ecosystem, and effectively anoint winners in the AI arms race.

Large tech companies are actively diversifying their AI chip supply to avoid lock-in with NVIDIA. However, the true challenge isn't just hardware performance. NVIDIA's powerful moat is its extensive software and developer ecosystem, which competitors must also build to truly break free from its market dominance.

Nvidia maintains partnerships with everyone, including rivals. By positioning itself as a neutral, essential supplier rather than a direct competitor, it has become central to every company's AI bet, securing its dominant and indispensable market position.

NVIDIA's vendor financing isn't a sign of bubble dynamics but a calculated strategy to build a controlled ecosystem, similar to Standard Oil. By funding partners who use its chips, NVIDIA prevents them from becoming competitors and counters the full-stack ambitions of rivals like Google, ensuring its central role in the AI supply chain.

Nvidia is developing networking technology that allows non-Nvidia AI chips to work together. This strategic move ensures customers remain within Nvidia's ecosystem, even if they don't buy Nvidia's GPUs, by capturing them at the crucial interconnect layer.

NVIDIA investing in startups that then buy its chips isn't a sign of a bubble but a rational competitive strategy. With Google bundling its TPUs with labs like Anthropic, NVIDIA must fund its own customer ecosystem to prevent being locked out of key accounts.