Nvidia’s Stake in Smaller AI Firms Sparks Rally in Shares

Nvidia’s Investments in AI Firms Spark Rally in Shares

Shares of smaller artificial intelligence (AI) firms experienced a significant rally on Thursday after Nvidia, the world’s leading AI chipmaker, disclosed its stake in them as of Dec. 31. This move by Nvidia offers insights into its growth strategy and highlights its growing influence in the AI world, according to a report by Reuters.

Nvidia’s largest investment of $147.3 million was in chip designer Arm Holdings, despite a failed attempt to acquire the company in a $80 billion deal two years ago due to antitrust regulations. Arm’s shares dipped slightly after Nvidia’s disclosure but had already surged over 60% in the previous week.

In addition to Arm Holdings, Nvidia invested nearly $76 million in Recursion, a biotech firm focused on accelerating the training of AI models for drug discovery. Following the disclosure, Recursion Pharmaceuticals saw a 5% increase in its shares.

Nvidia also invested approximately $3.7 million in SoundHound AI, a developer of conversational voice assistants, causing SoundHound AI’s shares to surge by 50%. Furthermore, Nvidia acquired a stake in Nano-X Imaging, an Israel-based medical device company that utilizes AI software for report analysis. Nano-X Imaging’s shares rose by 52% following Nvidia’s disclosure.

Additionally, Nvidia provided $3 million in capital to TuSimple Holdings, an autonomous driving technology company that recently delisted from the Nasdaq. Investors view Nvidia’s involvement as a positive sign, helping these companies raise capital. However, Nvidia’s investments indicate a portfolio approach, meaning there may be both winners and losers among the companies it has invested in.

Nvidia’s market value has rapidly increased, making it the third most valuable U.S. company. The chipmaker’s dominance in providing computer chips for AI processes has also shut off the funding tap for its potential competitors. This marks the first time since 2002 that Nvidia has exceeded Amazon in market value after market close.

Overall, Nvidia’s investments in these AI firms have sparked a rally in shares, showcasing the company’s growing influence and strategic approach in the AI world.