Nvidia Bolsters AI Leadership with Investment in Arm Holdings, Eyes Future Growth in Semiconductor Industry

Nvidia Corp NVDA, a leading force in the artificial intelligence (AI) industry, recently revealed its investment portfolio, showcasing stakes in Arm Holdings Plc ARM, SoundHound AI Inc SOUN, and Recursion Pharmaceuticals Inc RXRX. 

Nvidia’s engagement with Arm is particularly notable, given their previous $40 billion acquisition attempt in 2020, which succumbed to regulatory hurdles in February 2022.

Nvidia’s stake in Arm was the most significant in value, amounting to $147.3 million, Fortune cites regulatory filings.

Despite Nvidia’s failure to go ahead with its planned acquisition of Arm, the British chip designer marked the most extensive initial public offering of 2023 and remained under the majority ownership of SoftBank Group Corp. 

Arm Holdings’ shares have grown substantially, with its market valuation soaring to nearly $130 billion, a testament to the robust growth and potential within the semiconductor and AI industries. 

Arm Holdings stock gained 145% in the last three months. The chip designer, which conducted its IPO in September, reached a market cap of $130 billion thanks to the AI frenzy. The $1.8 trillion market cap chip designer Nvidia gained 52% in market value in the last three months.

Last week, Arm Holdings reported its quarterly earnings. The chip designer exceeded quarterly sales and EPS expectations with $824 million in revenue and $0.29 EPS, outpacing analyst forecasts due to the growing adoption of Armv9-based chips and increased demand for advanced CPUs in AI applications. 

Analysts highlighted the significant role of Armv9 in smartphones and potential growth in the Data Center, Automotive, and IoT sectors. 

The investment in SoundHound AI, a company specializing in AI-driven audio recognition software, was seen as a positive move by the market. Nvidia’s relationship with SoundHound dates back to 2017.

Nvidia’s investments in Recursion Pharmaceuticals and SoundHound were valued at $76 million and $3.67 million, respectively. Additionally, Nvidia reported smaller investments in Nano-X Imaging Ltd NNOX, a medical imaging company, and TuSimple Holdings Inc, which focuses on autonomous driving technology.

Price Action: ARM shares closed higher by 5.35% at $126.40 on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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