Nvidia (NASDAQ:NVDA | NVDA Price Prediction) just keeps making smart, though “circular” deals in AI. Love it or hate it, Jensen Huang’s empire is certainly putting its excess cash to good use as it looks to put down even more of its chips in this AI revolution, which many pundits, including Dan Ives of Yorkville Ives, see as being in the third inning.
In any case, the latest circular deal may very well be the most intriguing, with Nvidia taking on a $5 billion stake in Ilya Sutskever’s AI lab named Safe Superintelligence. Indeed, it’s been quite a while since we’ve heard of Mr. Sutskever, a brilliant deman who departed OpenAI more than two years ago over disagreements with where the firm was headed, specifically on AI safety.
AI safety is no longer an afterthought
When it comes to safe AI, perhaps there is no better name than Safe Superintelligence. While it’s still early days, I do think investing in one of the brightest minds in the space is a wise move by Jensen Huang and his firm. It can be tough to pick and choose winners at the frontier of AI. But diversifying across promising firms with the best visionaries, I think, is a wise move that could pay major dividends in the decades to come.
Why? These days, it’s as much about safety and guardrails as it is about capability. In light of the Hugging Face incident, which saw OpenAI’s agent go rogue, perhaps capability has gone a bit ahead of safety and putting the right guardrails in place to prevent such unforeseen breaches. Any way you look at it, the incident seems to reinforce Mr. Sutskever’s views and might shine an even brighter light on the man’s AI lab.
Of course, safety isn’t exactly exciting on the surface, but if things really do get a bit scary with AI as agents start going about doing their own thing to accomplish their mission, perhaps “safe and sound” is what’s going to start winning market share, especially as we begin to gain a grasp of the consequences of agentic AI-related incidents, which I’m sure will only pile up as the technology becomes more capable, affordable, and widely available to the masses.
In my view, Safe Superintelligence stands out as more of a safety-focused AI lab that can build safe superintelligence without having to worry about rushing a product to commercialization to grab or maintain market share, and please investors, which is a huge advantage for a firm that’s starting with more of a safety-first approach, rather than building fast, breaking things, and putting the guardrails in place afterward.
The safety-first approach could set a new high bar for how innovation at the frontier is done
Could a safety-first approach and native alignment really be the strategy that helps Mr. Sutskever’s firm win the long game, even as the firm becomes mostly invisible in the nearer term? Possibly. Because the company is doing things differently and perhaps more responsibly (at least on paper), it leads me to believe that the firm may very well be positioned to win in an environment where government regulators might have to step in in a more meaningful way.
Of course, there are risks involved with placing regulatory hurdles that are too high.
But, at the same time, the risks associated with agentic AI in the hands of a bad actor, I think, are just too high. Whether it’s the big name (Ilya Sutskever, a man who I view as a genius and one of the brightest minds in AI) or the approach, which could really start to pay off once regulators finally do step in, perhaps in response to an incident, or the quiet breakthroughs going on behind the curtain, I do think Safe Superintelligence may very well be one of Nvidia’s wisest bets, especially if the investment marks the start of a budding relationship that helps the GPU giant remain the hardware vendor of choice.
The bottom line
If you’re going to expand your reach across the AI stack while widening the economic moat, you’ve got to form the right relationships. And like it or not, the circular deals are the most rational thing Nvidia could do at a time like this while it’s flush with cash.
And, right now, it looks like Jensen Huang has planted all the right seeds to remain a massive winner as the AI boom advances. Whether it’s Safe Superintelligence, Thinking Machines Lab, or another innovator that comes from out of left field, odds are that Nvidia will be quietly posting wins in the background.
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