Nvidia has been making significant strides in the world of artificial intelligence (AI) stocks, with two particular investments standing out. The company, originally valued at $360 billion at the beginning of 2023, has now skyrocketed to a value of $3.1 trillion, making it the third-largest company globally, just behind tech giants Microsoft and Apple.
One of Nvidia’s notable investments is in Arm Holdings, which received a substantial investment of around $147 million. The stock has seen an impressive 130% gain already in 2024, reflecting the company’s potential for growth and innovation in the semiconductor industry.
In addition to Arm Holdings, Nvidia also made a more modest investment of around $3.7 million in SoundHound AI. This investment has also paid off, with the stock climbing 87% year-to-date, now valued at $6.7 million. SoundHound AI has developed sophisticated conversational AI software tools that have been adopted by various industries, including hospitality, restaurants, and automotive, showcasing its versatility and market potential.
While both Arm Holdings and SoundHound AI have shown promise and growth potential, investors need to consider the valuation and performance of these stocks carefully. Arm Holdings, despite its impressive revenue of $3.2 billion in fiscal 2024, is currently trading at a high price-to-sales ratio of 53, making it a potentially risky investment. Conversely, SoundHound AI, with its revenue growth of 73% in the recent fiscal quarter, presents a more favorable price-to-sales ratio of 19.5, indicating a better value proposition for investors.
Ultimately, Nvidia’s strategic investments in AI companies like Arm Holdings and SoundHound AI reflect its commitment to fostering innovation and supporting industry growth. While these stocks have soared in value, investors are advised to assess the risks and opportunities associated with each investment before making any decisions. As Nvidia continues to lead the way in GPU technology for data centers and AI models, its investments in smaller AI companies are likely to play a pivotal role in shaping the future of the industry.
