Nvidia stock had a quiet morning Thursday after closing at a record high Wednesday. The chipmaker’s stock price took a lull, but the disclosure of investments in other companies caused stocks such as SoundHound AI to soar.
Shares rose 2.5% on Wednesday to close at $739. This raised the company’s market capitalization to $1.825 trillion, making it the third-largest company in the United States, overtaking Google’s parent company Alphabet.
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It closed the day at a valuation of $1.821 trillion.
Nvidia’s focus is on its earnings report, which it plans to release on February 21st.
“In the short term, we expect modest improvement in both revenue and EPS for the quarter. [earnings per share] and most importantly its data center business,” Piper Sandler analyst Harsh Kumar wrote in a research note Thursday.
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For the April quarter, Kumar said he expects Nvidia to increase data center revenue by 10% from the January quarter, but the stock price reaction is likely to be muted as a result. However, he noted that this would likely eliminate potential revenue from newly developed chips for China.
Kumar raised his target price on Nvidia stock to $850 from $620 and maintained an “overweight” rating on the stock.
Nvidia rose along with other semiconductor stocks amid optimism about demand for semiconductors to support artificial intelligence and other advanced technologies. Nvidia is making its own bet on AI development, which became clear when it disclosed the investment in a stock filing after the close of trading on Wednesday.
The company owned approximately 1.7 million shares of voice-based technology company SoundHound AI, according to filings.
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As of the end of December, its value at the time was approximately $3.7 million. Soundhound stock rose 74% to $3.93 in premarket trading Thursday.
Nvidia’s filing also mentions an investment in chip designer Arm Holdings.
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Medical image developer Nano-X Imaging
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and drug developer Recursion Pharmaceuticals.
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Shares of the latter two companies also soared in pre-market trading.
The amount held is not particularly surprising. Nvidia announced his $50 million investment in Recursion last year, with him participating in his $75 million funding round for SoundHound in 2017. On the other hand, his holdings in NVIDIA’s Nano-X were only about $400,000 at the end of December.
Still, for now, the NVIDIA association looks like it could drive the stock significantly higher, but with the risk of a pullback once the hype fades.beam imaging
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The company’s stock fell 12.2% in premarket trading on Thursday, but its value has increased more than sixfold since Monday when it announced a collaboration with NVIDIA on automated video modernization.
Email Adam Clark at adam.clark@barrons.com.
