Nvidia stock experienced a slight decline on Thursday, following a record high close the day before. Despite this dip, the revelation of Nvidia’s investments in various companies, including SoundHound AI, boosted the value of those stocks significantly.
Stock Performance and Market Capitalization
At the opening bell, Nvidia’s stock dropped by 0.9% to $732.21. However, it had closed the previous day with a 2.5% increase at $739. With this surge, Nvidia’s market capitalization reached an impressive $1.825 trillion, propelling it to become the third-largest company in the United States. This surpassed Google-parent Alphabet, which ended the day with a valuation of $1.821 trillion.
Rise Alongside Chip Industry Optimism
Nvidia has been witnessing a remarkable rise parallel to other chip stocks due to increasing optimism regarding semiconductor demand for artificial intelligence and other cutting-edge technologies. Not only has Nvidia capitalized on this industry trend, but it has also actively invested in the development of AI innovation.
Investments in SoundHound AI and Others
Revealed through a recent stock filing, Nvidia’s investments were put into the spotlight. The filing unveiled that Nvidia possessed approximately 1.7 million shares of SoundHound AI, a company specializing in voice-based technology, by the end of December. This investment amounted to approximately $3.7 million at the time. As a result of this news, SoundHound shares skyrocketed by an impressive 49% to $3.35.
Additionally, Nvidia’s disclosure showcased its investments in other prominent companies. These included chip designer Arm Holdings, medical-imaging developer Nano-X Imaging, and drug developer Recursion Pharmaceuticals. As a direct consequence of Nvidia’s involvement, the shares of all three companies experienced notable increases.
Nvidia’s commitment to strategic investments not only demonstrates their dedication to AI development, but it also reinforces their position as a key player within the semiconductor industry. As the chip giant continues to make bold moves, its future prospects remain promising.
Nvidia’s Impact on Stock Performance
Nvidia, a leading technology company, has had a significant influence on the stock performance of various companies. In 2017, Nvidia participated in a $75 million funding round for SoundHound, showcasing its commitment to innovation. Last year, the company publicly announced its $50 million investment in Recursion, further strengthening its presence in the market. Additionally, Nvidia’s holding in Nano-X reached a value of approximately $400,000 by the end of December.
Associating with Nvidia has proven to be highly advantageous for companies, with the potential to supercharge their stock value. However, it is crucial to acknowledge that this association may also lead to a pullback when the initial hype diminishes. For instance, Beamr Imaging experienced a 36% decline in stock value on Thursday. Despite this setback, the company had witnessed a remarkable sixfold increase since announcing joint research on automated video modernization with Nvidia earlier in the week.
Looking ahead, the focus for Nvidia shareholders is the company’s upcoming earnings report scheduled for February 21. Analysts predict a modest beat for the quarter in terms of both revenues and earnings per share (EPS), particularly emphasizing the data center business’s performance. Harsh Kumar, a renowned analyst at Piper Sandler, anticipates Nvidia to provide guidance indicating a 10% quarter-over-quarter growth in data center revenue for the April quarter. While this might result in a muted stock reaction, it is important to note that the guidance is unlikely to consider any potential revenue from newly developed chips for the Chinese market.
Due to these promising prospects, Kumar has raised his target price on Nvidia stock to $850 from $620 and maintains an Overweight rating on the stock.