Nvidia Stock Wavers. Why the Chip Maker’s AI Bets Are Boosting SoundHound.

Nvidia was fluctuating Thursday after the stock set a record closing high the previous day. While the chip maker’s own stock took a breather, the disclosure of its investments in other companies helped stocks including SoundHound AI rocket higher.

Nvidia shares were flat at $738.66 in premarket trading.

The stock closed up 2.5% at $739 on Wednesday. That saw its market capitalization rise to $1.825 trillion, making it the third-largest U.S. company, overtaking Google-parent Alphabet, which closed the day with a valuation of $1.821 trillion.

The focus on Nvidia has been on the company’s upcoming earnings report Feb. 21.

“In the near-term, we see a modest beat for the quarter both for revenues as well as EPS [earnings per share] and most importantly the data center business,” Piper Sandler analyst Harsh Kumar wrote in a research note on Thursday.

Kumar said he expects that for the April quarter Nvidia will guide for 10% growth in data-center revenue from the January quarter, which would likely result in a muted stock reaction. However, he noted this will likely exclude any potential revenue from newly developed chips for China.

Kumar raised his target price on Nvidia stock to $850 from $620 previously, keeping an Overweight rating on the stock.

Nvidia has rallied alongside other chip stocks amid optimism about the demand for semiconductors to power artificial intelligence and other advanced technology. Nvidia has made its own bets on the development of AI, which were on show when it disclosed its investments in a stock filing after the close of trading Wednesday.

The filing showed that it owned about 1.7 million shares of voice-based technology company SoundHound AI as of the end of December, worth roughly $3.7 million at the time. SoundHound shares were up 74% in premarket trading on Thursday at $3.93.

Nvidia’s filing also listed investments in chip designer Arm Holdings, medical-imaging developer Nano-X Imaging, and drug developer Recursion Pharmaceuticals, with shares of the latter two companies also surging in premarket trading.

The holdings shouldn’t come as a particular surprise. Nvidia had participated in a $75 million funding round for SoundHound back in 2017 and it publicly announced its $50 million investment in Recursion last year. Meanwhile, Nvidia’s holding in Nano-X was worth only around $400,000 as of the end of December.

Still, at this point any association with Nvidia looks to have the ability to supercharge a stock, although it comes with the risk of a pullback when the hype fades. Beamr Imaging stock was down 12.2% in premarket trading Thursday, having risen more than six times in value since it said on Monday that it would present joint research relating to automated video modernization with Nvidia.

Write to Adam Clark at [email protected]