AI companies emerge after chip giant Nvidia reveals involvement By Reuters

By Medha Singh

(Reuters) – Shares of smaller ai companies rallied on Thursday after the world's most dominant ai chipmaker, Nvidia (NASDAQ ), revealed its stake in them, offering clues about its growth strategy. .

The rally showed Nvidia's growing influence in the world of ai as its market value grows at a dizzying pace, making it the third most valuable company in the United States.

Its largest investment of $147.3 million was in Arm Holdings (NASDAQ:), the chip designer that Nvidia couldn't buy after the $80 billion deal cleared the antitrust hurdle two years ago.

Nvidia had indicated interest in buying Arm shares last year during the British company's debut on Nasdaq. Arm shares, which have risen more than 60% over the past week after a strong forecast, fell almost 0.5% on Thursday.

Nvidia disclosed its December 31 interests in a 13F filing late Wednesday. Regulatory disclosure is closely followed by investors and is generally associated with moves made by fund managers rather than public companies.

Insider Intelligence analyst Gadjo Sevilla said Nvidia's involvement in a wide range of companies could help it make more affordable but highly focused chipsets rather than expensive general-purpose ai chips.

Shares of biotech company Recursion Pharmaceuticals, in which Nvidia invested nearly $76 million, gained 5%. Last year, Nvidia had said it would invest in it to speed up the training of the Utah-based company's artificial intelligence models for drug discovery.

The mega-cap Silicon Valley firm also invested nearly $3.7 million in a developer of conversational voice assistants. SoundHound ai (NASDAQ ), which sent its shares up 50% to $3.33.

Nvidia also bought a stake in Israel-based medical device company Nano-X Imaging, which uses artificial intelligence software to analyze reports. Nano-X shares rose 52%.

Self-driving tech TuSimple Holdings, which delisted from the Nasdaq last week, raised $3 million in capital from the chipmaker.

“An investment in Nvidia is viewed very positively by investors and should help those companies that need to raise capital,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office.

He said his investments indicate a portfolio approach in which both winners and losers can be expected.

SoundHound shares were the most actively traded on US exchanges, with 160 million shares changing hands as of 11:30 a.m. ET, according to LSEG data.

Retailers also jumped into the race. SoundHound and Nano-X Imaging were among the five most actively traded stocks by individual investors, JPMorgan data showed.

Shares of other microcap ai companies rose in tandem, with Guardforce ai adding 11% and BigBear.ai Holdings gaining 10.3%.

Several well-known funds, including Rokos Capital Management and Bridgewater Associates, also invested in the chipmaker toward the end of 2023, Nvidia's regulatory filing showed.