Nvidia’s Biggest AI Bet Is Crashing Its ‘Secret Portfolio.’ Can It Recover?
Rich Duprey
Sun, December 14, 2025 at 8:53 AM EST
5 min read
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Quick Read
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Nvidia (NVDA) invested $350M in CoreWeave (CRWV) before its IPO and now holds a 7% stake. CoreWeave accounts for over 86% of Nvidia’s $3.84B AI investment portfolio.
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CoreWeave dropped 60% from its June peak to $39B market cap. The company posted $1.36B in Q3 revenue but continues losing money despite strong growth.
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Nvidia committed to purchase $6.3B of unsold CoreWeave cloud capacity through 2032, but this revenue backstop raises questions about real end-user AI demand.
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Nvidia (NASDAQ:NVDA) has assembled a strategic portfolio of public investments in AI-focused companies, including chip designers, data center operators, and infrastructure providers that not many investors are aware of. It consists of six holdings that at the end of the third quarter was valued at approximately $3.84 billion.
The dominant position is in CoreWeave (NASDAQ:CRWV), the AI-specialized cloud provider that relies heavily on Nvidia GPUs and accounts for over 86% of the portfolio's value.
Nvidia invested $350 million in CoreWeave in two tranches before its March IPO. Having originally invested $100 million in April 2023, it invested another $250 million just before its public debut, giving it a total of approximately 24.2 million shares at $40 per share, securing a 7% stake for Nvidia.
Following the IPO, CoreWeave surged to an all-time high of $187 per share in June, but has been on a fairly steady decline since. Despite almost doubling from the IPO price, the stock is down nearly 60% from that peak. On Friday, it suffered another 10% drop, bringing its market capitalization to around $39 billion -- a sharp erosion from the nearly $80 billion it was worth at the end of June.
Decline Triggered by Insider Activity
Friday's plunge followed an SEC Form 4 filing revealing that Chief Financial Officer Nitin Agrawal sold 66,467 shares on December 11 at an average price of $82.58, totaling approximately $5.49 million. While investors are often reminded to ignore insider sales because they can sell stock for any reason -- or no reason at all -- those made by CFOs should be noted because of their specialized knowledge of the company's finances.
However, Agrawal's transaction stemmed from the vesting of restricted stock units, with the sale covering associated tax withholding obligations. Insider sales are common upon RSU vesting and often serve administrative purposes rather than signaling fundamental concerns. This was a non-event for CoreWeave, and Agrawal still owns over 203,000 shares after the sale.
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Concerns Over AI's Sustainability
Yet, CoreWeave's challenges reflect broader skepticism about the AI sector's growth trajectory. Analysts and investors have highlighted potential "circular financing" dynamics, where Nvidia provides investments or capacity commitments to customers that purchase its hardware.
CoreWeave's arrangement with Nvidia includes a $6.3 billion agreement under which Nvidia commits to purchasing any unsold cloud computing capacity through April 2032, providing a revenue backstop but raising questions about true end-user demand.
Across the industry, major technology companies are increasingly relying on debt to fund expansive AI infrastructure projects as operational cash flows prove insufficient. Meta Platforms (NASDAQ:META) issued $30 billion in bonds in 2025 to support data center expansions, and Oracle (NYSE:ORCL) just faced investor backlash after its Q3 earnings. Its stock dropped 15% on concerns over ballooning debt levels that exceed $100 billion and negative free cash flow tied to AI commitments.
These developments have fueled debates about overinvestment risks, potential capacity gluts, and the long-term profitability of AI buildouts.
CoreWeave-Specific Pressures
For CoreWeave, despite reporting strong Q3 revenue of $1.36 billion (up significantly year-over-year) and a substantial backlog, the company posted ongoing net losses and relies heavily on debt financing, including a $2.6 billion convertible notes offering completed just this month, albeit at a low 1.75% interest rate.
High capital expenditures for data center expansion -- projected to be in the tens of billions of dollars over the coming years -- are seen as straining its balance sheet.
Key Takeaway
CoreWeave is the primary drag on Nvidia's investment portfolio performance. Although five of the six holdings have declined since the end of Q3 -- contributing to a significant overall drop in portfolio value -- CoreWeave's 42% decline has been roughly twice as severe as the next-largest loser, Nebius Group (NASDAQ:NBIS), which is down 22%. Only Applied Digital (NASDAQ:APLD) has recorded gains during this period.
Analysts maintain a generally positive outlook on CoreWeave, though, citing its revenue growth, customer relationships, and backlog as supportive factors. However, a sustained recovery hinges on demonstrating profitable execution, managing leverage effectively, and proving that enduring AI demand exists in the face of financing and sustainability doubts. Until it can demonstrate this, I wouldn't be buying into CoreWeave just yet.
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