Nvidia, the leading graphics processing unit (GPU) manufacturer, has witnessed a remarkable surge in its market capitalization, growing from $360 billion to over $2.2 trillion in just 18 months. This remarkable growth can be attributed to the company’s involvement in the rapidly expanding field of artificial intelligence (AI). Nvidia’s powerful GPUs are widely used in data centers to develop, train, and deploy AI models, contributing significantly to the company’s success.
In its quest to further expand its presence in the AI industry, Nvidia has invested in several AI-focused companies. According to a recent filing with the Securities and Exchange Commission (SEC), Nvidia acquired stakes in five different stocks towards the end of 2023.
One of Nvidia’s most significant investments was in Arm Holdings, a company that designs processors for leading chip manufacturers. Nvidia invested approximately $147 million in Arm Holdings, which was more than the combined investment in the other four companies.
Nvidia also invested in Recursion Pharmaceuticals, a company that utilizes AI to accelerate the drug discovery process. Additionally, it acquired a stake in Nano-X Imaging, which uses AI technology to enhance medical imaging and improve patient outcomes.
TuSimple Holdings, a developer of autonomous driving technologies for the trucking industry, and SoundHound AI (NASDAQ: SOUN), a specialist in conversational AI technologies, were also among Nvidia’s investments.
Among these investments, SoundHound AI has emerged as the top performer, with its stock price surging 160% in 2024 so far. This means that Nvidia has more than doubled its investment in the company since acquiring it in the fourth quarter of 2023.
SoundHound AI specializes in conversational AI, which uses voice recognition technology to create various business applications. The company’s technology is used by restaurant chains like Applebee’s, Chipotle, and Krispy Kreme to take customer orders, reducing the workload on employees. Additionally, SoundHound’s Employee Assist tool allows workers to hold conversations with an AI virtual assistant for various purposes.
SoundHound AI’s technology is also powering voice assistants in numerous new cars from manufacturers like Mercedes-Benz, Hyundai, and Stellantis. The company has also collaborated with Nvidia Drive, an autonomous vehicle platform, to create a powerful voice assistant that does not require internet connectivity, ensuring data privacy.
While SoundHound AI’s revenue is relatively small at $11.6 million in the first quarter of 2024, it grew by 73% compared to the previous year. The company has also issued a modest increase in its full-year revenue forecast, expecting to generate a record-high $71 million, representing a 55% year-over-year growth.
Despite the impressive growth, SoundHound AI is currently in the scale-up phase, requiring significant capital investment. As a result, the company reported a loss of over $33 million in the first quarter of 2024.
While Nvidia’s investment in SoundHound AI is only worth $9 million, the stock’s current valuation and risk profile make it a speculative bet for investors. Investors with a high-risk tolerance may consider investing in SoundHound AI, while others may prefer to wait for a more favorable price or until the company proves its profitability.
Source: The information in this article is obtained from a news article titled “Nvidia Recently Bought 5 Artificial Intelligence (AI) Stocks, and 1 Is Absolutely Soaring” published by The Motley Fool on May 15, 2024. You can check out the full article here.
I’m Voss Xolani, and I’m deeply passionate about exploring AI software and tools. From cutting-edge machine learning platforms to powerful automation systems, I’m always on the lookout for the latest innovations that push the boundaries of what AI can do. I love experimenting with new AI tools, discovering how they can improve efficiency and open up new possibilities. With a keen eye for software that’s shaping the future, I’m excited to share with you the tools that are transforming industries and everyday life.