Nvidia's is spending like its cash is burning a hole in its pocket. The chip maker can certainly afford it but using its financial might as a way to tackle competition could bring problems further down the line.

It could tie-up with Korean AI chip designer Rebellions, according to a report on Friday. But Nvidia isn't just the bank behind the AI ecosystem, it is one of its busiest venture capital investors as well, making dozens of private-company investments in the past 18 months.

A lot of those investments have been made in companies Nvidia hopes will eventually be big customers such as AI model developers or robot makers.

But the real muscle flexing comes with acquiring would-be competitors. Nvidia's largest deal was one such move, its $20 billion agreement to license the technology and take the key employees of chip company Groq, agreed late last year.

Now Nvidia could be on the hunt for another such deal. Nvidia has held talks with Korean AI chip designer Rebellions about a possible tie-up, which could take the form of collaboration, an investment, or an acquisition, Bloomberg reported Friday, citing people familiar with the matter.

Nvidia didn't immediately respond to Barron's request for comment.

If not exactly pocket change, Rebellions would certainly be affordable for Nvidia. Rebellions was last valued at about $2.3 billion. Nvidia is set to generate more than $210 billion in free cash flow this year, according to FactSet.

However, it would raise a couple of issues. The first is why Nvidia would need to pursue such a deal. Rebellions is a specialist in AI chips for inference-producing output from models. That's the same area as Groq's specialism. With Wall Street still waiting to see the demand for the combined Nvidia-Groq hardware, another inference acquisition would seem oddly timed.

Secondly, Nvidia has to be careful of regulatory entanglements. The company did face a series of reported antitrust investigations in various markets back in 2024 although things have largely gone silent since then as AI chip competition has grown. But the company deliberately structured its Groq deal as a licensing arrangement to avoid competition questions.

An acquisition of Rebellions-which is backed by the South Korean government-would open a can of worms Nvidia might prefer to keep closed.

Nvidia shares were up 0.7% in Friday's premarket.