Nvidia on Monday announced an additional $2 billion investment in neocloud flagship CoreWeave. This is the latest in an ongoing effort to help companies enable what CEO Jensen Huang calls the “five-layer cake” of building artificial intelligence. Monday’s announcement aims to help AI infrastructure company CoreWeave develop more than 5 gigawatts of data center capacity by 2030 using Nvidia technology in-house. These giant data centers, or AI factories as Jensen likes to call them, have peak loads comparable to small cities. Since its inception, CoreWeave has used Nvidia GPUs (graphics processing units, the gold standard in AI) and networking products. As part of the expanded relationship, CoreWeave will also implement Nvidia’s Vera CPU (central processing unit) and its BlueField storage. CRWV ALL Mountain CoreWeave’s Performance Since IPO in March 2025 Under the deal, CoreWeave issued approximately 22.94 million shares and sold them to Nvidia in a private placement on Friday for $87.20 per share. In the early hours of trading on Monday, the stock rose as much as 16.8%, topping a session high of $108. The rally subsided a bit later in the day. NVIDIA stock fell slightly. As of September, Nvidia already held 24.28 million CoreWeave shares, according to FactSet. Critics may argue that Monday’s disclosure is another example of so-called cyclical investing, where Nvidia invests in CoreWeave and CoreWeave turns around and acquires Nvidia technology. While we understand the concerns, we do not view this as a cyclical investment that investors should avoid. This is not a circular trade First of all, Nvidia does not need to use the capital markets to raise money and has the funds it needs to invest. While it has invested heavily in many other AI companies, including CoreWeave and OpenAI, Nvidia is not “backing” these companies as critics say. In an interview with CNBC after Monday’s investment announcement, Jensen explained, “We’re investing a fraction of the amount that ultimately has to be delivered.” Yes, the investment is large, but it is far from the amount needed to achieve the vision. Therefore, these companies, including CoreWeave, will likely need to raise or generate more funds to complete their projects. As investors in Nvidia, we want Nvidia to make strategic investments that put unspent cash to good use. Indeed, NVIDIA could buy up shares in companies that it thinks will appreciate in value, generating large profits from uninvested cash that it can use to fund growth or buy back stock. However, by investing in its own customers, Nvidia can further standardize the entire industry on its own ecosystem. This not only helps ensure strong demand in the future as hardware is replaced and upgraded and new software is introduced to run on that hardware. This also means that other companies, even those that Nvidia doesn’t invest in, will need to leverage Nvidia’s products if they want to attract customers for themselves. Investing in these customers has the potential to deliver strong direct financial returns, given the movement of CoreWeave stock in the news, and even stronger indirect benefits through strengthening the Nvidia ecosystem as AI advances accelerate and adoption becomes mainstream. On CNBC, Jensen explained that the AI stack is like a five-layer cake, with energy at the bottom. Next comes chips dominated by Nvidia. Infrastructure provided by CoreWeave and other clouds. AI models such as OpenAI’s ChatGPT and Google’s Gemini. And at the top, the application layer, you’ll find a variety of applications currently being developed for consumers and businesses across a variety of industries. Nvidia may be at the center of the chip tier, but it wants to be invested at every level. As investors, why wouldn’t we want the same? Jensen spoke of the “incredible” demand for AI software and hardware as companies race to develop the next generation of pre-training, post-training, and inference capabilities. Additionally, the CEO said that over the past year, he has seen companies investing in the “application” layer of AI. I touched on this briefly last week when I covered a conversation between Jensen and BlackRock CEO Larry Fink at the World Economic Forum in Davos, Switzerland. In Jensen’s view, the application layer is the most important part of the AI stack because it will transform every industry. CoreWeave CEO Michael Intrator, who appeared with Jensen on CNBC, said Monday’s announcement means three things. This means coordinating “around the physical infrastructure,” giving CoreWeave “great integration with Nvidia on the software side,” and third, validating that CoreWeave can deliver the best product to its customers, allowing the company to license its software to on-premises data center customers who don’t want to put all their workloads in a third-party cloud. Restarting operations in China Importantly, given next month’s release of Nvidia’s quarterly results, Jensen reiterated that management’s financial outlook does not include revenue or potential business in China. That said, he added, “We look forward to the finalization of the H200 license and look forward to considering how the Chinese government wants to bring us back into this market.” He added that demand for H200 and demand for the Nvidia stack remains “very significant.” Jensen appeared on CNBC from China, where he was scheduled to celebrate Lunar New Year with Nvidia employees. Many Chinese high-tech companies are said to be interested in the H200s after the US government allowed chip exports late last year. The move reverses an earlier ban on allowing Nvidia and other major AI chip designers to sell in China, citing U.S. national security concerns about hardware falling into the hands of China’s military. The US government will receive 25% of sales of Chinese chips. Conclusion Nvidia stock has been flat since the start of 2026 after rising nearly 39% last year. The stock, which peaked at $207 in late October, closed at nearly $188 on Friday. This is a decrease of just over 9%. “New club members need to embrace Nvidia here, because there’s a lot of compression in the face of another explosion in revenue,” Jim Cramer said at the club’s morning meeting Monday. NVDA 1Y Mountain Nvidia 1 Year (The Jim Cramer Charitable Trust is long NVDA. See here for a complete list of stocks.) 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