Nvidia Owns 4 Artificial Intelligence (AI) Stocks, and These 2 Have Soared the Most

Nvidia was a $360 billion company at the beginning of 2023. A mere 18 months later, it’s now price $3.1 trillion, making it the world’s third-largest company behind Microsoft and Apple.

Nvidia designs probably the most powerful graphics processing units (GPUs) for data centers, which developers use to construct, train, and deploy artificial intelligence (AI) models. Within the recent fiscal 2025 first quarter (ended April 28), those chips sent the corporate’s data center revenue skyrocketing 427% 12 months over 12 months to a record $22.6 billion.

Nvidia is now spreading a few of that wealth by investing in smaller AI firms, a method that supports the industry’s growth and may lead to a pleasant return for its own shareholders if the bets repay.

Nvidia headquarters. Image source: Nvidia.

The 4 stocks Nvidia owns

In accordance with Nvidia’s latest form 13F, filed with the Securities and Exchange Commission on May 15, the chipmaker holds a stake in the next AI firms:

  • Arm Holdings (NASDAQ: ARM), which built the architecture most semiconductor firms use to design their chips.

  • SoundHound AI (NASDAQ: SOUN), which develops voice recognition and conversational AI software.

  • Nano-X Imaging, which uses AI to provide higher results from medical imaging.

  • Recursion Pharmaceuticals, which uses AI to help in drug discovery.

It invested in each company at the top of 2023. Arm Holdings received the most important investment at around $147 million, which is greater than Nvidia deployed into the opposite three stocks combined. Today, that Arm position is price $311 million because of a 130% gain within the stock in 2024 already.

Nvidia invested around $3.7 million in SoundHound AI, and its stock has climbed 87% 12 months so far, which now places that value at $6.7 million.

Arm and SoundHound are the standout performers, and here’s why that would proceed.

Arm Holdings

Nvidia tried to purchase Arm for $40 billion in 2020, however it was forced to desert the deal because regulators said it was anticompetitive. It’s no surprise, because Arm built the architecture that many leading semiconductor makers use to design their chips — including Nvidia and considered one of its closest competitors, Advanced Micro Devices.

Arm makes a speciality of central processing units (CPUs), that are utilized in personal computers (PCs), smartphones, and even a number of the GPUs designed by Nvidia to extend efficiency. Its upcoming GB200, for instance, is configured with a mixture of two GPUs and two Arm-based CPUs, and it’s able to inferencing AI models at five times the speed of its flagship H100, which currently dominates the information center market. This may drive costs down for developers, who often pay for computing capability on a by-the-minute basis.

An estimated 99% of smartphone CPUs also use Arm’s architecture, so the corporate is overwhelmingly dominant in that segment. Plus, Microsoft is integrating AI into the Windows operating system, which is triggering a latest wave of demand for next-generation chips from computer manufacturers. Arm CEO Rene Haas believes his company can capture a 50% share of the Windows PC market inside five years.

The corporate likely has a vivid future, but investors needs to be wary of its lofty valuation before they rush to purchase the stock. It generated $3.2 billion in revenue during fiscal 2024 (ended March 31), and based on its market capitalization of $169.8 billion, its stock trades at a price-to-sales (P/S) ratio of 53.

That makes it even costlier than Nvidia stock, with its P/S ratio of 38.7. Remember, Nvidia is predicted to just about double its revenue in its current fiscal 2025, whereas Arm is projected to grow its revenue by just 23%. It doesn’t make much sense to pay the next valuation for Arm relative to Nvidia, when Arm is growing at a much slower pace.

Nvidia bought Arm stock at a less expensive price than where it trades today, so it could be best for investors to attend for a pullback before joining the party.

SoundHound AI

SoundHound AI developed a collection of conversational AI software tools which were deployed by businesses within the hospitality, restaurant, and automotive industries. They’ll hold entire spoken conversations with a user, making them extremely useful in high-pressure settings where fast answers are required to serve customers.

The restaurant industry is using SoundHound’s latest Worker Assist tool to present employees a helpful virtual assistant they will call upon at any time. It understands store policies, and it might even offer employees guidance when making menu items. The technology can be used to take customer orders in a drive-thru lane, over the phone, and in a store.

White Castle, Chipotle Mexican Grill, and Krispy Kreme are only a number of the chains using it. With help from its acquisition of restaurant AI company SYNQ3, SoundHound is now in 10,000 locations with 100,000 more within the pipeline, and management says its addressable market includes 1 million restaurants and 30 million other businesses across North America. So the corporate has barely scratched the surface of a chance that may very well be price $100 billion.

SoundHound’s in-car voice assistant is utilized by leading automotive brands like Honda, Hyundai, and Stellantis (which owns Jeep, Dodge, and Chrysler). And the corporate recently partnered with Nvidia’s Drive platform to refine the voice assistant by delivering it on the sting, which suggests users won’t need network connectivity to access it. That improves privacy and enables it to work even in geographic areas with no network service.

SoundHound generated $11.6 million in revenue through the recent fiscal 2024 first quarter (ended March 31), representing 73% growth from the year-ago period. Its order backlog also soared 80% to a record $682 million, so there’s loads of demand within the pipeline. Considering its stock trades at a P/S of 19.5, it looks like a significantly better value than Arm.

Nonetheless, SoundHound lost $33 million through the first quarter. Provided that it has only $117 million in money available, the corporate will probably must raise money by selling equity, which can dilute existing shareholders. Subsequently, this stock needs to be reserved for investors with a high risk tolerance.

Do you have to invest $1,000 in Arm Holdings straight away?

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Advanced Micro Devices, Apple, Chipotle Mexican Grill, Microsoft, and Nvidia. The Motley Idiot recommends Stellantis and recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.

Nvidia Owns 4 Artificial Intelligence (AI) Stocks, and These 2 Have Soared the Most was originally published by The Motley Idiot

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