over a meaningful period of time. Nvidia (NVDA -0.06%) became a blockbuster investment. It's up almost 1,800% over the past five years, and he's more than tripled in the past year alone, driven by investor excitement about artificial intelligence (AI).
There's good reason to believe Nvidia is a top AI stock. Management attributes its revenue surge to AI-related products and services. To show how strong demand is, the company expects to report $20 billion in revenue in its fiscal fourth quarter of 2024. This is a 231% increase over the previous year, an impressive number for a company of this size.
AI is the biggest investment trend right now, and Nvidia stock is one of the most popular ways to ride this trend. However, the company plans to purchase 5 shares. other AI company.
This interesting development made headlines on February 14 when Nvidia filed its first 13F filing with the Securities and Exchange Commission. This form is for institutional investors to report their stock holdings.
According to 13F, Nvidia has a portfolio of stocks worth $230 million, and these are the AI stocks it is buying.
A glimpse inside Nvidia's stock portfolio
Nvidia's 13F shows that the company only owns five stocks, but all five are related to AI in some way. Here we provide a brief overview of each company, from the largest investment to the smallest investment.
- arm holdings (arm -4.00%) licenses its AI semiconductor chip designs to other companies, and this business is currently in high demand. Nvidia attempted to acquire Arm in 2020, but ultimately called the deal off in 2022 following regulatory pushback. As an investor, you can expect profits in the future. This is his largest stock position in Nvidia, valuing him at $147 million as of the SEC filing.
- Nvidia's next portfolio is recursion medicine (RXRX 5.79%). This early-stage biotech company uses AI models to process genetic data and discover new drugs. It's a potentially game-changing idea in healthcare, which is why the stock has caught the attention of growth investor Cathie Wood.
- Soundhound AI (Thorn 1.60%) offers an AI voice assistant similar to what big tech companies already offer. But SoundHound AI believes its AI can better understand regular language. And based on a growing list of customers, management's claims appear to have support.
- Which Nvidia Stocks Investors Should Ignore? TuSimple HoldingsConsidering that it will be delisted from Nasdaq. That said, the company also has his AI angle and is working on enabling self-driving for trucking companies.
- finally, nano-x imaging (NNOX 36.32%) — or simply Nanox — is Nvidia's smallest stock position. This company wants to move the world to new digital X-ray technology. We want to use AI to examine these digital images and find patterns that doctors might miss, leading to better outcomes for patients.
When it comes to AI stocks, I personally think this trend as a whole is overstated. And the history of the stock market is littered with past trends that eventually faded away. Therefore, investors need to be discerning.
However, I believe that AI can open up many possibilities when it comes to the medical field. This is why I'm particularly intrigued by his Nvidia investments in Recursion Pharmaceuticals and Nanox.
These two stocks are especially high risk/high return.
A full disclaimer before we proceed. I'm not a medical expert at all. I'm just an ordinary investor looking in from the outside. Investing great Warren Buffett says to stay within his own circle of ability. And the equally great Peter Lynch says to invest in what you know. Medical stocks are not for me.
However, I fully understand that the datasets in this field are huge, and that processing large amounts of data is where AI really shines.
Take Recursion Pharmaceutical's latest partnership as an example. In the third quarter of 2023, we partnered with Tempus to gain access to an additional 20 petabytes (over 20,000,000 gigabytes) of oncology data. We currently have a staggering 50 petabytes of capacity at our disposal for cancer research. And to process this much information, the company plans to work with Nvidia to make his BioHive-1 supercomputer even more powerful.
Nanox currently operates on a limited number of medical devices. But when it went public in 2020, the company said it ultimately wanted to deploy 15,000 machines, each capable of performing more than 150 digital scans each month.
Nanox is still far from that goal and may never get there. But if that goal is met, about 2.3 million medical images will be taken every month. This could quickly become the world's largest medical image dataset, and the company will need to use AI to make all sorts of discoveries.
Recursion Pharmaceuticals and Nanox are leveraging AI to enable significant medical advances using vast medical datasets. This is why I say these two stocks have attractive upside potential.
That said, as the graph below shows, Recursion Pharmaceuticals and Nanox's revenue streams are meager and their losses are huge.
Data by YCharts.
Recursion Pharmaceuticals and Nanox are very risky stocks and investing in them should not be taken lightly. Both are likely to fail, and Nvidia's investment should not be seen as a guarantee of success.
It's exciting to think about what could happen if things go well and AI leads these two companies to great breakthroughs. Investors should be fully aware of the risks associated with these stocks and keep their emotions in check.
Jon Quast is in the Nano-X Imaging Department. The Motley Fool has a position in and recommends Nvidia. The Motley Fool recommends NASDAQ. The Motley Fool has a disclosure policy.
