NVIDIA significantly increased its equity investment in partners and customers in the last fiscal year, using more than US$70 billion in cash in an attempt to consolidate its demand base and maintain its dominant position in the increasingly competitive artificial intelligence (AI) chip market. According to the company's latest cash flow statement disclosed, Nvidia purchased $40.6 billion in tradable securities and $17.5 billion in non-tradable or private securities during the fiscal year, significantly higher than the levels of $26.6 billion and $1.5 billion respectively in the previous fiscal year, and the overall scale more than doubled.

These investments have once again sparked discussions about Nvidia’s so-called circular transactions. In this type of deal, Nvidia invests money in customers or partners, such as OpenAI and CoreWeave, and these companies then purchase Nvidia's AI accelerators to build data centers and AI service platforms.

After the company reported better-than-expected earnings on Wednesday, Chief Financial Officer Colette Kress said continued investment in what she called the "extreme ecosystem" -- ranging from upstream suppliers to early developers of AI products using Nvidia hardware -- remains one of the company's most important strategies.

"We will continue to make these types of investments a key component of our operating processes and strategic plans," Kress said in response to analysts' questions about why more cash would not be used to repurchase shares that have performed relatively lacklusterly recently.

Nvidia quantified the overall scale of investments in other companies in its financial reports, but the cash flow documents did not disclose the specific scale of funds invested in each company.

Nvidia also disclosed for the first time its partnership with AI startup Groq Inc. last year. Some of the financial details of an unusual deal struck. Nvidia said in December that it would pay for the rights to use Groq's technology and planned to integrate its chip designs into future products. As part of the agreement, Groq's CEO and several senior executives also joined Nvidia.

The financial report shows that Nvidia paid US$13 billion for the transaction during the fiscal year and will pay another US$4 billion (including interest) within one year. The company described the agreement as a non-exclusive license and recognized $14.4 billion in goodwill and $2.5 billion in "developed technology" intangible assets on its books.

The above-mentioned transactions directly pushed up Nvidia's capital expenditure scale. Data show that the company's cash outflow for investing activities rose to US$52.2 billion, a significant increase from US$20.4 billion in the previous fiscal year.

At the same time, NVIDIA's main business is highly profitable: cash flow from operating activities reached US$102.7 billion during the fiscal year, up from US$64.1 billion in the previous year.

However, due to the dual effects of activist investment and approximately US$40 billion in share repurchases, the company's cash and equivalents at the end of the period only increased by approximately US$2 billion, although its net profit was as high as US$120 billion.

Investor Michael Burry, best known for "The Big Short," pointed out in response to Nvidia's earnings report on Thursday that the company's purchase commitments were as high as $95.2 billion, compared with only $16.1 billion a year ago. NVIDIA relies heavily on TSMC for AI accelerator manufacturing.

These long-term commitments can amplify risks when demand fluctuates. However, if Nvidia successfully locks in enough production capacity, it would also help answer another long-standing concern on Wall Street - whether the company can obtain enough supply to meet its high-growth guidance.

In this regard, Nvidia made it clear in its latest earnings call that the company is preparing to respond to the growing needs of customers.

Chief Financial Officer Kress said: "We believe that appropriate inventory and supply commitments have been implemented to meet future demand, including shipment arrangements that extend into the 2027 calendar year."