Nvidia Corp. said today it’s investing an additional $2 billion into the cloud infrastructure company CoreWeave Inc., which operates enormous data centers packed full of graphics processing units.

The companies said the money will help to fund the development of new artificial intelligence factories based on Nvidia’s technology. The AI factories, which will be operated by CoreWeave, are expected to reach a capacity of 5 gigawatts by 2030.

“This expanded collaboration underscores the strength of demand we are seeing across our customer base and the broader market signals as AI systems move into large-scale production,” said CoreWeave Chief Executive Michael Intrator.

Gigawatts are a common metric used to describe AI data center power capacity. According to the U.S. Energy Information Administration, 5 gigawatts is equivalent to the annual power consumption of about 4 million American households.

Nvidia’s $2 billion investment is going to be enough to finance only a portion of that capacity, though, as the total cost is likely to exceed $250 billion, according to Barron’s. In an interview with CNBC, Nvidia CEO Jensen Huang said the amount of funding needed to support 5 gigawatts is “really quite significant.” He added that the company is “investing a small percentage of the amount that ultimately has to be provided.”

The chipmaker, which previously invested $6.3 billion into CoreWeave in September to acquire a 6.6% stake, said the investment reflects the confidence it has in the cloud provider’s business model, team and growth strategy.

CoreWeave operates dozens of data centers that are primarily equipped with Nvidia’s GPUs. It rents those chips out to enterprise customers and AI models developers looking for computing power to train and run powerful large language models, which consume vast resources. The company is considered to be one of the top “neoclouds,” which compete with established public cloud infrastructure providers such as Amazon Web Services Inc. and Microsoft Azure.

In recent weeks, there has been a lot of concern from investors about how viable CoreWeave’s business model really is, given the way it finances its data centers through high-interest debt. Its stock was down 30% since October, although it gained just over 5% today after reports of Nvidia’s new investment emerged.

CoreWeave does at least seem to have plenty of demand for its GPUs. In September, it announced it had struck a deal with Meta Platforms Inc. to provide it with $14.2 billion worth of cloud compute capacity, just days after agreeing a deal worth $6.5 billion with OpenAI Group PBC.

Photo: Nvidia