Nvidia holdings disclosure pumps up shares of small AI firms

Investors have turn out to be so enamored with Nvidia’s artificial intelligence story that they need a piece of anything the chipmaker touches.

On Wednesday, Nvidia disclosed in a regulatory filing that it has stakes in a handful of public firms: Arm, SoundHound AI, Recursion Pharmaceuticals, Nano-X Imaging, and TuSimple.

Aside from Arm, which topped $130 billion in market cap recently, shares of the Nvidia-backed firms soared on Thursday following the 13F filing, a form that should be submitted by institutional investment managers overseeing not less than $100 million in assets.

But none of those investments could be surprising to anyone who took the time to sift through old news reports and filings. The AI mania is firmly in an irrational exuberance phase, and investors are pouncing on anything and all the pieces within the space.

No stock is hotter than Nvidia, which passed Amazon in market value on Tuesday after which Alphabet on Wednesday to turn out to be the third Most worthy company within the U.S., behind only Apple and Microsoft. Nvidia shares are up greater than 200% over the past 12 months because of seemingly limitless demand for its AI chips, which underpin powerful AI models from Google, Amazon, OpenAI and others.

SoundHound, which uses AI to process speech and voice recognition, jumped 68% on Thursday, after Nvidia disclosed a stake that amounted to $3.7 million on the time of the filing. Nvidia invested in SoundHound back in 2017 as a part of a $75 million enterprise round.

SoundHound went public through a special purpose acquisition company in 2022, and Nvidia was named as a strategic investor in its presentation.

Nano-X uses AI in medical imaging. Nvidia’s disclosure of a $380,000 investment in the corporate sent the top off 59% on Thursday. Nvidia’s involvement dates back years to a enterprise investment in Zebra Medical, an Israeli medical imaging startup. Nano-X acquired Zebra in 2021.

TuSimple, an autonomous trucking company, rocketed 40% on Thursday after the disclosure of Nvidia’s $3 million stake. The share rally comes a month after the corporate announced plans to delist from the Nasdaq because of a “significant shift in capital markets” since its 2021 IPO. TuSimple debuted at $40 a share and now trades for roughly 50 cents.

“Accordingly, the Special Committee determined that the advantages of remaining a publicly traded company not justify the prices,” TuSimple said in a release on Jan. 17. “The Company is undergoing a metamorphosis that the Company believes it could possibly higher navigate as a personal company than as a publicly traded one.”

Nvidia invested in TuSimple in 2017, 4 years before the IPO.

Nvidia acquired its stake in biotech company Recursion more recently. Like TuSimple, Recursion went public in 2021, but Nvidia bought in two years later through what’s called a personal investment in public equity (PIPE). Nvidia bought $50 million price of shares in 2023 and now has an investment price $76 million, based on its filing.

Recursion shares spiked 15% on Thursday.

Nvidia’s own financials can be on full display next week, when the corporate reports quarterly earnings. Analysts predict year-over-year revenue growth above 200% to greater than $20 billion.

The corporate’s more moderen investments are more likely to be way more significant than its earlier bets, disclosed late Wednesday, because they’re at the center of the AI boom. Lately, Nvidia has backed hot AI startups including Cohere, Hugging Face, CoreWeave and Perplexity.

“AI is transforming the best way consumers access information,” said Jonathan Cohen, Nvidia’s vp of applied research, in Perplexity’s announcement of a $73.6 million funding round last month “Perplexity’s world-class team is constructing a trusted AI-powered search platform that can help push this transformation forward.”

WATCH: Perplexity AI goals to rival Google