Key Points
① NVIDIA's investment layout shows a trend of diversification, covering AI infrastructure, voice interaction, medical health and other fields, reflecting the deep penetration of AI technology in various industries.
② Most of NVIDIA's concept stocks are in a high-growth period. Although their current profitability is limited, they have unique technical advantages and commercial potential in their respective niche markets. NVIDIA's investment not only provides financial support, but more importantly, technology cooperation and ecosystem empowerment, which helps accelerate the product implementation and market expansion of these companies.
③ NVIDIA's investments often represent the direction of industry development, reflecting the key areas of AI technology application, and imply potential technological breakthroughs. Investors need to closely monitor the commercial progress, technological innovation capabilities and industry competitive landscape of these companies, and discover new investment opportunities by understanding NVIDIA's strategic layout.
In an article a few months ago, the RockFlow research team summarized NVIDIA's true moat as an AI leader, and why we believe NVIDIA is not only a great company, but also a potential high-return investment target.
In fact, in addition to NVIDIA itself, the key tracks and companies it invests in and focuses on are also frequently sought after by the US stock market. The market believes that NVIDIA's investment decisions are based on a deep understanding and forward-looking judgment of the development of AI technology, often representing the direction of industry development, and the companies that receive its investment may enjoy multiple benefits such as technology support, chip supply and ecosystem resources. Therefore, NVIDIA concept stocks are expected to share the huge dividends of the AI revolution, and are particularly worth paying attention to.
In this article, the RockFlow research team will provide an in-depth analysis of NVIDIA's portfolio concept stocks, helping you understand their long-term investment value and feasible investment strategies (Note: This article did not include ARM in the research targets, which is also one of NVIDIA's holdings, but its market value has already exceeded $100 billion, which is beyond the range of this article's research of hundreds of millions to tens of billions).
1. Serve Robotics (SERV), focusing on the development of autonomous delivery robots
What do the AI leader NVIDIA and the world's largest ride-hailing platform Uber have in common? The answer is that they are both optimistic about an autonomous delivery robot company.
Uber has partnered with 14 different companies to develop autonomous driving platforms, as it expects the mobility industry to get rid of human drivers. Autonomous driving and robotics are both driven by AI, and NVIDIA has also developed its own autonomous driving platform. The two have jointly chosen to invest in SERV, a $600 million company that has developed autonomous delivery robots. The two together own more than 20% of SERV's outstanding shares, indicating their optimism about the company's prospects.
In most cities in North America, the existing last-mile delivery solutions are quite inefficient. Uber Eats and DoorDash, for example, rely on delivery people who usually use cars to deliver food and other products to customers. SERV has raised a well-thought-out question: Why use two-ton cars to deliver two-pound burritos?
Robots and drones may be better solutions. SERV says that the hardware and software costs associated with developing AI and automation are rapidly declining, making robots an increasingly economical choice. It predicts that once robot adoption rates continue to rise and business scales expand, its per-delivery cost will ultimately be as low as $1.
SERV's robots have Level 4 autonomous driving capabilities, meaning they can operate on sidewalks within a designated area without human intervention. Since the beginning of 2022, the company's robots have delivered over 50,000 orders to more than 400 restaurants in Los Angeles, with a reliability rate of 99.94%. SERV says this makes the robots 10 times more reliable than human drivers.
The company's latest Gen3 robots are the smartest and fastest robots to date, with a top speed of 11 miles per hour. Thanks to NVIDIA's Jetson Orin technology, which includes the hardware and software required for advanced robotics and computer vision, Gen3 is five times more capable than SERV's previous generation robots. It has faster top speed, longer range and longer runtime, all of which combine to reduce operating costs by 50%.
Under a contract with Uber, SERV is working to deploy 2,000 new robots by the end of 2025, which will expand its reach to other parts of California as well as Dallas and Fort Worth in Texas. This is also a win for Uber, as the successful implementation of this plan will allow the company to save money by reducing the use of human delivery drivers.
SERV was previously spun off from the Uber-acquired Postmates and became an independent entity in 2021. However, Uber remains SERV's largest investor, holding a 12% stake. NVIDIA has invested in SERV since 2022 and currently holds a 10% stake.
The RockFlow research team believes that its long-term investment value is mainly reflected in its technological leadership, huge market potential, long-term cost advantages over manual delivery, and clear business model. In the future, with the continuous growth of automation demand, SERV will have more application scenarios for expansion.
2. Nebius Group (NBIS), an emerging AI cloud computing service provider
Nebius is a cloud computing and AI infrastructure service provider. On December 2, 2024, the company announced the completion of a $700 million financing round, with participation from venture capital firm Accel, NVIDIA, and Orbis Investments, among others. The funds will be used to further build large-scale GPU clusters, expand the cloud platform, and provide more tools and services for developers to fully support the innovative development of global AI pioneers.
NBIS's AI services rely heavily on NVIDIA's high-end GPUs. This financing will provide momentum for NBIS to accelerate the construction of more advanced AI infrastructure and deepen its strategic partnership with NVIDIA. With the support of NVIDIA's advanced technology, NBIS can provide customers with more efficient and powerful computing platforms, thereby enhancing its competitiveness in key areas such as cloud computing, big data analysis and AI development.
NVIDIA's technological advantages are of significant strategic value to NBIS. By accessing NVIDIA's latest GPUs and AI acceleration hardware, NBIS can not only enhance the computing power of its infrastructure, but also quickly adapt to the growing global demand for AI applications, providing customers with efficient and scalable solutions.
In fact, NBIS became an NVIDIA-certified partner as early as Q3 2023, and has already deployed a large number of NVIDIA H100 GPUs for AI training, with the two parties deeply collaborating and co-developing enterprise-level AI solutions.
The RockFlow research team believes that NBIS's long-term investment value includes: the growth potential of the AI and cloud computing market, its competitive technical capabilities in the AI infrastructure field, a high-quality enterprise customer base, NVIDIA's advanced technology support, and the recurring revenue from its subscription model. Therefore, its future performance is worth looking forward to.
3. SoundHound AI (SOUN), AI-empowered voice brings strong growth
As a super bull stock in the AI sector this year, SoundHound AI's stock price has soared more than 600% this year, outperforming NVIDIA.
Last month, SOUN disclosed record-high third-quarter revenue and raised its full-year revenue forecast, citing the company's successful expansion into target markets. CEO Keyvan Mohajer said in the third-quarter earnings statement: "We believe voice is an extremely compelling application within generative AI."
In the earnings call, SOUN updated the progress of its Polaris large language model. Mohajer said that Polaris has taken the company's proprietary automatic speech recognition technology to new heights. Polaris learns from the billions of real conversations and over 100 million hours of audio recordings in dozens of languages that the company has accumulated over the years. They have already deployed Polaris in real-world applications, with excellent results. Accuracy has improved significantly, while managed costs have decreased. Reportedly, Polaris currently handles about a third of the AI interactions SOUN processes for its restaurant industry clients.
In addition, NVIDIA is not only a shareholder of SOUN, but also its partner. Earlier this year, SOUN announced an in-vehicle voice assistant that uses a large language model and operates on NVIDIA's DRIVE technology.
SOUN's impressive performance has attracted a lot of capital. Investors believe that its AI voice products have strong demand in industries such as automotive, catering, financial services, healthcare, and insurance, and SOUN has the ability to continuously improve the industry diversification of its solutions.
4. Applied Digital (APLD), an AI cloud service company, will benefit from the growth in computing power demand
APLD designs, develops, and operates digital infrastructure solutions and cloud services, high-performance computing, and AI industries in North America. In September this year, this AI cloud company received $160 million in funding from investors including NVIDIA and related companies. According to statistics, NVIDIA currently holds a total of about 7.72 million shares in APLD, worth about $63.66 million, which is about 3% of APLD's shares.
In the AI boom, NVIDIA has been increasing its investment and supporting companies that use its chips. For APLD, its relationship with NVIDIA is even closer: it announced a partnership to build an AI supercomputing center as early as July 2023, not only purchasing a large number of NVIDIA H100 GPUs, but also obtaining NVIDIA technology support certification.
5. Nano-X Imaging (NNOX), AI medical and assisted diagnosis are expected to play a greater role
AI medical company Nano-X Imaging has developed a commercial-grade tomography imaging device with a digital X-ray source, providing remote radiology services and developing AI applications for real-world medical imaging applications.
More importantly, the company's Nanox.CLOUD can use a matching engine to match medical images with radiologists, providing an image repository, connection to diagnostic AI systems, billing, and reporting. Its MARKETPLACE platform can provide AI-based software imaging solutions for hospitals, health maintenance organizations, integrated healthcare networks, pharmaceutical companies, and insurance companies, aiming to identify or predict undiagnosed or underestimated medical conditions such as osteoporosis and cardiovascular disease by mining existing CT images.
6. Recursion (RXRX), AI-driven drug development will bring a new revolution
RXRX uses AI, automated biology and high-throughput screening, and machine learning algorithms to identify and predict the efficacy of potential drug targets, thereby accelerating the drug discovery process. It has a large proprietary chemical and biological database called the Recursion Data Universe, which exceeds 23 PB and includes data on disease-related proteins, genes, and pathways. Its Recursion Map contains billions of searchable chemical and biological inferences, with hundreds of millions of wet lab experiments performed each week.
RXRX can evaluate the potential failure of drugs earlier, thereby saving millions of dollars and bringing drugs to market faster and more efficiently. RXRX has established partnerships with Bayer and Roche Holdings.
In July 2023, NVIDIA invested $50 million in RXRX to help accelerate the development of its AI drug discovery models. In February 2024, NVIDIA announced that it holds about $76 million in RXRX stock. RXRX has long used NVIDIA's DGX SuperPOD system, and the two companies are also co-developing a digital biology platform.
