Nvidia (NASDAQ: NVDA) is the world’s largest semiconductor company, and after surpassing a $2 trillion valuation, it now stands as one of America’s most valuable companies overall as measured by market cap. The only companies that are ahead of Nvidia in terms of value are Microsoft and Apple.
The majority of Nvidia’s market capitalization has been added in the last 12 months, largely due to its data center chips that are designed to process artificial intelligence (AI) workloads. CEO Jensen Huang is often referred to as the “Godfather of AI” by Wall Street analysts, and now, the company is spreading its good fortune by investing in other AI stocks.
In its recent 13-F filing with the Securities and Exchange Commission, Nvidia revealed that it had purchased shares in five AI stocks in the fourth quarter of 2023. These include Arm Holdings, Nano-X Imaging, Recursion Pharmaceuticals, Tusimple Holdings, and SoundHound AI (NASDAQ: SOUN). Arm Holdings attracted the largest investment, with Nvidia’s position worth over $147.3 million at the end of last year.
SoundHound AI has been one of the best-performing stocks in the group, with its value soaring by 180% year-to-date. This surge in demand for SoundHound AI is driven by its conversational AI technology, which is being utilized by companies in various industries such as hospitality and automotive.
While SoundHound AI has experienced impressive revenue growth and has a substantial order backlog, the company is still operating at a loss. Investors need to be cautious as the company may need a cash infusion in the near future, which could potentially impact its stock price.
Despite the risks, Nvidia’s recent investment in SoundHound AI stock has sparked speculation that the company could benefit from the expansion of Nvidia’s partnership with ServiceNow. This partnership aims to improve the telecommunications industry using generative AI, and SoundHound’s conversational AI technology could play a crucial role in this initiative.
For investors considering investing in SoundHound AI stock, it’s important to understand the risks involved and carefully evaluate the company’s financial position. While it may be a speculative bet on the AI industry, it could offer significant growth potential in the years ahead.
In conclusion, Nvidia’s investment in SoundHound AI stock has raised eyebrows and sparked investor interest in the company. While it may be a risky investment, the potential for substantial returns in the future cannot be ignored. As the AI industry continues to evolve, companies like SoundHound AI are poised to play a significant role in shaping the future of technology.
