Nvidia (NASDAQ:NVDA) is off to a great start this year, and thanks to its recent 13F filing, so are five other tech stocks. The chipmaker has seen shares surge more than 220% over the past year as the artificial intelligence (AI) boom has overtaken markets. Nvidia recently proved, though, that it has the power not just to demonstrate impressive growth but to help smaller companies rise as well. In a report for the 2023 fiscal year filed with the U.S. Securities and Exchange Commission (SEC), the company revealed positions in five smaller companies, revealing what its leaders saw as the best stocks to buy over the past year.
This list included companies, both large and small, including penny stock SoundHound (NASDAQ:SOUN). However, thanks to Nvidia’s investment, it may not be trading below the $5 mark for long. Wedbush Securities analyst Dan Ives issued the following take in a note to investors today:
“We view this as a positive indicator for the company as this investment now further solidifies the company’s brand within the AI Revolution with the Godfather of AI Jensen and NVDA now backing SOUN and we believe this could be the start of a broader investment into the company down the line which is a clear tailwind.”
Does this mean that the other companies Nvidia is betting on are going to keep rising during the coming months? Let’s take a look at the stocks to buy if you want to invest like one of Silicon Valley’s leading tech and assess what the future likely holds for these AI-focused tech plays. An investment from a company like Nvidia can change the ways in which investors regard them.
Stocks to Buy: Arm Holdings (ARM)
Since going public in September 2023, Arm Holdings (NASDAQ:ARM) has performed very well. The British semiconductor producer has risen more than 107% over the past six months.
As InvestorPlace contributor Charles Munyi notes, this can be attributed to soaring demand for graphic processing units (GPUs). Nvidia also makes these key AI products, which is likely the reason it tried to acquire Arm in 2020 in a deal worth $40 billion. While antitrust pressure ultimately stopped it, that didn’t stop Nvidia from acquiring a sizable chunk of the company. According to the 13F filing, it currently owns 1,960,784 shares of ARM stock, a total value of $147,343,114.
Nano-X Imaging (NNOX)
This medical imaging company isn’t well known, but it has been surging since news broke of Nvidia’s investment. Nano-X Imaging (NASDAQ:NNOX) is the smallest position out of the five, with Nvidia owning only 59,632 shares, worth $379,856 combined. However, NNOX stock surged more than 50% this morning and has barely dipped, indicating that its ride isn’t over yet. If Nvidia bought its shares anytime after the summer of 2023, then it likely acquired NNOX at a discounted price, making it a highly strategic investment. It seems that the tech giant knows which stocks to buy when they are on a dip.
This could be the turning point that Nano-X needs to start making up the ground it has lost since then. It operates in a lucrative, albeit niche, market that is projected to reach a $61.51 billion valuation by 2030. For companies in the space, that means ample room to run, which Nvidia clearly thinks NNOX stock can do.
Stocks to Buy: Recursion Pharmaceuticals (RXRX)
The only company on this list not in the tech space, Recursion Pharmaceuticals (NASDAQ:RXRX) may strike some as an odd choice for an investor like Nvidia. However, the company does offer investors some AI exposure. In fact, it features a platform powered by AI that is helping its peers in the genomics and biotech spaces. The pharmaceutical innovator has enjoyed a year of mostly steady growth, with share prices roughly doubling since early 2023. It’s also the largest holding out of the five stocks on this list, with Nvidia holding 7,706,363 shares.
While RXRX stock hasn’t risen today by as much as NNOX, it has still spent the day slowly trending upward. And Nvidia isn’t the only one betting on it. Famed contrarian investor Cathie Wood of Ark Invest also saw it as a clear choice among stocks to buy after Recursion announced its new platform. Her funds purchased 74,000 shares of RXRX stock, making it a top 10 holding in its ARK Genomic Revolution ETF (BATS:ARKG). The list of prominent names throwing their weight behind Recursion only seems to be growing.
SoundHound AI (SOUN)
Even in the throes of the AI boom, it’s been hard for SoundHound AI to find real momentum. This penny stock has seen some growth during the AI gold rush, but it has still struggled to demonstrate any real growth. However, Nvidia’s bet on SOUN stock sent it soaring, pushing shares up by more than 50% today. While it still trades at penny stock levels, if this growth continues, it could easily rise above $5 per share soon. As InvestorPlace contributor Jeremy Flint reports:
“SoundHound AI is a small-cap AI stock that may not stay small for long. The company is bringing AI into oft-overlooked fields within voice recognition, like helping restaurant operations improve order flow through AI voice assistance. Voice recognition is a small but growing field, and as AI stocks like SOUN show us, the total addressable market is as wide as a company can adapt its tech to serve.”
Flint speculated that SoundHound could become the next Palantir Technologies (NYSE:PLTR). Nvidia evidently agrees with that analogy, as it has purchased 1,730,883 shares of SOUN stock. This type of endorsement could be exactly what the small-cap company needs to show investors that it is worth betting on.
Stocks to Buy: TuSimple Holdings (TSPH)
Nvidia’s bet on this Chinese autonomous trucking technology company likely turned some heads for one reason: TuSimple (OTCMKTS:TSPH) is a microcap stock that trades at much lower levels than even SoundHound, with a market cap of just over $105 million. Even after rising almost 35%, TSPH still trades at only $0.48 per share. However, Nvidia clearly saw it as a key opportunity to buy a company with high growth potential on a dip. It finished 2023 with 3,465,372 TuSimple shares. The fact that this stock has spent the past six months bleeding out 70% further suggests that Nvidia is optimistic about its growth prospects.
For all that, investors should be careful to account for TuSimple’s progress. In June 2023, it became the first company to successfully operate a fully autonomous semi-truck on China’s open road. With a strong presence in both China and the United States, the company is well-positioned to secure a piece of a fast-growing market.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
