By Medha Singh
(Reuters) -Shares of five smaller AI firms surged on Thursday before the bell after the world’s most dominant artificial intelligence chipmaker, Nvidia, disclosed stakes in them, offering clues on its growth strategy.
Nvidia’s regulatory disclosure came close on the heels of it becoming the third most-valuable U.S. company, fueled by a rapid rise demand for its data center chips.
Its largest investment of $147.3 million was in Arm Holdings, the chip designer that Nvidia failed to buy after the $80 billion deal hit the antitrust hurdle two years ago.
Nvidia had indicated interest in purchasing shares of Arm during the British company’s Nasdaq debut last year.
Shares of Arm that has said its processors complement Nvidia’s chips for AI work in data centers were up 2.1%.
Shares of biotech firm Recursion Pharmaceuticals, in which Nvidia invested nearly $76 million, gained 18.3%.
Last year, Nvidia said it would invest in Recursion to speed up training of the Salt Lake City, Utah-based firm’s AI models for drug discovery.
The Silicon Valley megacap firm also invested nearly $3.7 million in conversational voice assistants developer SoundHound AI, sending its shares 23% higher.
It bought shares of Israel-based medical device company Nano-X Imaging, which uses AI software to analyze reports. Nano-X shares rose 80% higher.
Autonomous driving technology TuSimple Holdings, which delisted from the Nasdaq last week, also drew $3 million in capital from the chipmaker.
“This is a way to collaborate with one of the smartest people in the business.. and gives Nvidia CEO Jensen Huang the opportunity to collaborate on projects moving forward,” said Thomas Hayes, chairman at Great Hill Capital.
Nvidia revealed its new stakes as of Dec. 31 in a 13-F filing with the U.S. SEC late on Wednesday.
SoundHound shares were the most actively traded across U.S. stocks trading before the bell, with 29 million shares changing hands by 8:05 a.m. ET, nearly three times its 25-day moving average, according to LSEG data.
Shares of other small-cap chipmakers rose in tandem, with C3.ai adding 1.4% and BigBear.ai Holdings gaining 7.3%.
(Reporting by Medha Singh in Bengaluru, Additional reporting by Bhanvi Satija and Johann Cherian; Editing by Krishna Chandra Eluri and Arun Koyyur)
