Nvidia's investments in these AI companies sent their stocks soaring
Investors can't get enough of Nvidia ( NVDA). Now, the company is spreading that love to other stocks.
On Wednesday night, an SEC filing revealed the chipmaking giant held investments in the stocks Arm Holdings ( ARM), SoundHound AI ( SOUN), and biotech company Recursion Pharmaceuticals ( RXRX) as of Dec. 31, 2023.
All three of the AI-related stocks popped on the news. Arm, whose stock was already up more than 80% in the last month after the company attributed its better-than-expected revenue expectations to AI initiatives, saw was up more than 6% on Thursday afternoon. Recursion's stock rose almost 15%.
Meanwhile,SoundHound, a smaller player that specializes in voice AI and speech recognition, saw a huge gain. The stock was on track for its best day ever at the open, popping about 80% before paring gains to nearly 60% on Thursday afternoon.
Still, the massive price move in SoundHound, which had been down more than 40% over the last year, reaffirms market enthusiasm for Nvidia and other names associated with the stock.
Nvidia shares areup nearly 50% since the start of 2024 and more than 220% in the past year. The company's market cap — which stood at $1.8 trillion as of Thursday midday — recently surpassed that of Amazon ( AMZN) and Alphabet ( GOOG, GOOGL). Only Microsoft ( MSFT) and Apple ( AAPL) now have a higher valuation than Nvidia.
The company's revenue has increased significantly over the past year as demand for its AI-powered chips has soared. In the third quarter, Nvidia reported revenue of $18.12 billion, up 206% from a year ago. The company is set to report quarterly results on Feb. 21.
Wedbush Securities senior equity analyst Dan Ives said that Nvidia's investments signal a stamp of approval from the "Godfather of AI," CEO Jensen Huang —and that can go a long way with investors.
"We view this as a positive indicator for [SoundHound] as this investment now further solidifies the company's brand within the AI Revolution," Ives wrote in a note on Thursday morning.
As of Dec. 31, Nvidia had a nearly $3.67 million stake in SoundHound. Meanwhile, its stakes in Arm and Recursion totaled just over $147 million and $75.9 million, respectively.
Nvidia's logo is seen displayed on a mobile phone screen with AI written in the background. (Idrees Abbas/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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