These 5 AI Companies’ Shares Are Being Purchased by Nvidia. Do You Think That Would Be Correct?

One of the most watched firms in the world is Nvidia (NASDAQ: NVDA). Once mostly recognized as one of the leading manufacturers of PC gaming GPUs, it has transformed into the industry leader in high-end data center GPU production. These days, Nvidia’s data center GPUs account for the majority of its revenue, and as the artificial intelligence (AI) sector grows, so does the need for these processors. For this reason, its stock has increased by nearly 3,000% in the last five years, and it is regarded as the industry’s fulcrum and bellwether.

Nvidia has been purchasing smaller AI companies’ stock, so it may still have lots of room to grow as more businesses introduce AI applications. Now let’s examine five of those investments to see if you should include them in your portfolio.

The Five Major AI Invested by Nvidia

Nvidia revealed its holdings in five businesses as of December 31, 2023, in a 13F filing filed earlier this year: Arm Holdings (NASDAQ: ARM), Recursion Pharmaceuticals (NASDAQ: RXRX), Nano-X Imaging (NASDAQ: NNOX), SoundHound AI (NASDAQ: SOUN), and TuSimple Holdings. The amount that Nvidia invested in each of those businesses is shown here, along with the amount that their shares have increased or decreased since that revelation.

1. SoundHound AI (SOUN on NASDAQ)
   SoundHound is a technology company that specializes in audio and speech detection. Its Houndify platform has been utilized to produce voice tools that are tailored to the needs of smart TV manufacturers such as Vizio, fast-food franchises like Church’s Chicken, and automobiles like Hyundai. Having been one of SoundHound’s initial investors when it was still a start-up, Nvidia has had a long-standing bullish view on the company.
2. Arm Holdings, Inc. (ARM) NASDAQ
   Approximately 99 percent of high-end smartphones on the market today are powered by Arm’s power-efficient CPUs. Arm’s designs are licensed by chip manufacturers such as Qualcomm, MediaTek, and Apple for use in their own mobile CPUs. Additionally, Nvidia licenses Arm’s ideas to use in its Tegra CPUs, which are found in car infotainment systems, Nintendo Switch consoles, and set-top boxes. Antitrust officials blocked Nvidia’s acquisition of Arm in 2022, just as the deal was about to close for $40 billion.
3. RXRX, a NASDAQ-listed pharmaceutical company
   Recursion processes drug discovery testing using AI algorithms. Although it is a more modest and riskier investment for Nvidia, the biotech industry could benefit from its exciting new technologies.
4. NNOX, or Nano-X Imaging (NASDAQ)
   Digital X-ray sources are produced by Nano-X, which also creates AI tools for chronic disease detection that go unnoticed. Nano-X is a smaller, more speculative venture with promise in the healthcare industry, similar to Recursion.
5. Easy Holdings, Inc.
   Chinese autonomous trucking business TuSimple. It did, however, choose to remove its shares from the Nasdaq earlier this year after becoming entangled in the growing tech conflict between the United States and China. TuSimple is a harder stock to promote because of its steep losses, high valuation, and lack of visibility.

Which of These Stocks Would You Invest in?

Using widely accepted accounting rules (GAAP), only Arm is continuously profitable out of these five businesses. It is therefore simpler to compare these five stocks using their enterprise values and projected revenue growth.

While none of these companies appear cheap at the moment, SoundHound may be the most fairly priced option given its potential for development. Although Arm manages a more stable company, the fervor for AI equities has driven up its price.

Although Recursion and Nano-X are creating technologies that show promise, their businesses have not yet reached a larger size. Regarding TuSimple, it is difficult to suggest this stock due to its voluntary delisting and the difficulties it is facing in the U.S.-China tech war.

Should You Take Nvidia’s Example?

With $7.59 billion in cash and equivalents at the conclusion of its most recent quarter, Nvidia’s five stocks are all quite small investments. Although growth-oriented investors should stay with the two most established firms, Arm and SoundHound, and merely keep a watch on the more speculative ones for the time being, the GPU giant won’t lose much sleep if one of these companies goes under.

Is It Time to Put $1,000 Into Nvidia?

Prior to purchasing Nvidia stock, take into account: Nvidia was not included in the list of the top 10 stocks that the Motley Fool Stock Advisor analysis team recently determined are the best ones for investors to purchase right now. In the upcoming years, the ten equities that made the cut might yield enormous profits.

Considering that Nvidia created this list on April 15, 2005, at the time of our advice, $1,000 would have earned you $785,556! Stock Advisor gives investors a clear road map for success that includes monthly stock recommendations, regular analyst updates, and advice on constructing a portfolio. Since 2002, the S&P 500 return has more than doubled thanks to the Stock Advisor service.