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AI stocks

Influencing the artificial intelligence (AI) landscape, Nvidia, the world’s leading AI chipmaker, has disclosed stakes in several smaller AI companies, triggering a rally in their stock prices. The revelation, made in a 13F filing on Wednesday, provides insights into Nvidia’s strategic growth plans, particularly as the company cements its position as the third most valuable U.S. company, experiencing rapid market value expansion.

Nvidia’s largest disclosed investment, totaling $147.3 million, was in Arm Holdings, a chip designer that Nvidia attempted to acquire for $80 billion two years ago. Despite the deal facing antitrust challenges and ultimately failing, Nvidia’s continued interest in Arm is evident. The disclosure showcases Nvidia’s diversification into various companies, a move that analysts believe could lead to the development of more affordable and hyper-focused chipsets tailored for specific applications, rather than general-purpose AI chips.

Several AI-related companies witnessed a surge in their stock prices following Nvidia’s disclosure. Recursion Pharmaceuticals, a biotech firm in which Nvidia invested nearly $76 million, experienced a 5% gain. Nvidia’s investment in Recursion last year aimed to accelerate the training of the firm’s AI models for drug discovery.

Conversational voice assistants developer SoundHound AI saw its shares skyrocket by 50% to $3.33 after Nvidia invested nearly $3.7 million. Similarly, Nvidia’s stake in Israel-based medical device company Nano-X Imaging, which utilizes AI software for report analysis, led to a remarkable 52% increase in Nano-X’s shares.

Autonomous driving technology firm TuSimple Holdings, which recently delisted from the Nasdaq, drew $3 million in capital from Nvidia. The diverse investments by Nvidia indicate a strategic portfolio approach, supporting companies in need of capital and potentially yielding both winners and losers.

Rick Meckler, a partner at Cherry Lane Investments, noted that an investment from Nvidia is viewed positively by investors and can aid companies in raising capital. The disclosed stakes by Nvidia also attracted attention from retail traders, with SoundHound and Nano-X Imaging ranking among the top five most actively traded stocks by individual investors.

The surge in AI-related stocks extended beyond those directly invested in by Nvidia, with Guardforce AI witnessing an 11% increase and BigBear.ai Holdings gaining 10.3%. Notably, several prominent funds, including Rokos Capital Management and Bridgewater Associates, also invested in Nvidia toward the end of 2023, further solidifying the chipmaker’s prominence in the AI landscape.

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