February 15, 2024 – 7:00 AM PST
(Reuters) – Shares of smaller AI firms rallied on Thursday after the world’s most dominant artificial intelligence chipmaker, Nvidia, disclosed stake in them, offering clues on its growth strategy.
The rally showed Nvidia’s growing influence in the AI world as its market value grows at a scorching pace, making it the third most-valuable U.S. company.
Its largest investment of $147.3 million was in Arm Holdings , the chip designer that Nvidia failed to buy after the $80 billion deal hit the antitrust hurdle two years ago.
Nvidia had indicated interest in purchasing shares of Arm during the British company’s Nasdaq debut last year. Shares of Arm were up nearly 4%.
Nvidia disclosed its stakes as of Dec. 31 in a 13F filing late on Wednesday. The regulatory disclosure is closely watched by investors and is generally associated with moves made by fund managers rather than public companies.
Shares of biotech firm Recursion Pharmaceuticals (RXRX.O), in which Nvidia invested nearly $76 million, gained 12.7%.
Last year, Nvidia had said it would invest in Recursion to speed up training of the Salt Lake City, Utah-based firm’s AI models for drug discovery.
The Silicon Valley megacap firm also invested nearly $3.7 million in conversational voice assistants developer SoundHound AI (SOUN.O), sending its shares 53% higher to $3.47.
SoundHound shares were the most actively traded across U.S. exchanges minutes after the opening bell, with 70 million shares changing hands, nearly seven times its 25-day moving average volume, according to LSEG data.
Wedbush analyst Dan Ives said Nvidia’s backing solidifies SoundHound’s brand within the “AI revolution” and could be the beginning of a broader investment into the company.
Nvidia also bought stake in Israel-based medical device company Nano-X Imaging (NNOX.O), which uses AI software to analyze reports. Nano-X shares rose 80% higher.
Autonomous driving technology TuSimple Holdings (TSPH.PK), which delisted from the Nasdaq last week, drew $3 million in capital from the chipmaker.
“This is a way to collaborate with one of the smartest people in the business.. and gives Nvidia CEO Jensen Huang the opportunity to collaborate on projects moving forward,” said Thomas Hayes, chairman at Great Hill Capital.
Shares of other micro-cap AI firms rose in tandem, with Guardforce AI adding 10% and BigBear.ai Holdings (BBAI.N) gaining 7.7%.
Global X Robotics and Artificial Intelligence ETF (BOTZ.O) was up 1%.
Reporting by Medha Singh in Bengaluru, Additional reporting by Bhanvi Satija and Johann Cherian; Editing by Arun Koyyur